EXHIBIT 10
PURCHASE AGREEMENT
THIS AGREEMENT, dated as of April 17, 1998, is made between and
among CHILDREN'S BROADCASTING CORPORATION, a Minnesota corporation (referred to
herein as "CBC"); CHILDREN'S RADIO OF CHICAGO, INC., a Minnesota corporation
("CRC"), CHILDREN'S RADIO OF DALLAS, INC., a Minnesota corporation ("CR
Dallas"), CHILDREN'S RADIO OF DENVER, INC., a Minnesota corporation ("CR
Denver"), CHILDREN'S RADIO OF KANSAS CITY, INC., a Minnesota corporation
("CRKC"), CHILDREN'S RADIO OF MINNEAPOLIS, INC. ("CR Minneapolis), CHILDREN'S
RADIO OF LOS ANGELES, INC., a Minnesota corporation ("CRLA"), CHILDREN'S RADIO
OF MILWAUKEE, INC., a Minnesota corporation ("CRM"), CHILDREN'S RADIO OF
PHILADELPHIA, INC., a Minnesota corporation ("CR Philadelphia"), and CHILDREN'S
RADIO OF PHOENIX, INC., a Minnesota corporation ("CR Phoenix") (CRC, CR Dallas,
CR Denver, CRKC, CRLA, CRM, CR Minneapolis, CR Philadelphia and CR Phoenix are
collectively referred to herein as the "Asset Subsidiaries"); KAHZ-AM, INC.
("KAHZ-AM"), KCNW-AM, INC. ("KCNW-AM"), KIDR-AM, INC. ("KIDR-AM"), KKYD-AM, INC.
("KKYD-AM"), KPLS-AM, INC. ("KPLS-AM"), WAUR-AM, INC. ("WAUR-AM"), WPWA-AM, INC.
("WPWA-AM"), WWTC-AM, INC. ("WWTC-AM"), and WZER-AM, INC. ("WZER-AM"), all
Minnesota corporations (KAHZ-AM, KCNW-AM, KIDR-AM, KKYD-AM, KPLS-AM, WAUR-AM,
WPWA-AM, WWTC-AM and WZER-AM are collectively referred to herein as the "License
Subsidiaries"); the Asset Subsidiaries and the License Subsidiaries are
collectively referred to herein as the "Subsidiaries"; and CBC and the
Subsidiaries are collectively referred to herein as the "Sellers"); CHILDREN'S
RADIO OF NEW YORK, INC., a New Jersey corporation ("CRNY"); and CATHOLIC RADIO
NETWORK, LLC, a California limited liability company (the "Buyer"); and
W I T N E S S E T H :
THAT, WHEREAS, CBC is the owner and holder of 100% of the issued
and outstanding stock of the Asset Subsidiaries and of CRNY; and
WHEREAS, each of the Asset Subsidiaries is the owner of the assets
described herein relating to the operation of the radio station indicated below
licensed to the community listed below (collectively referred to herein as the
"Stations"), except for the Federal Communications Commission (the "FCC" or the
"Commission") licenses, permits or authorizations issued with respect to the
Stations, and each is the owner and holder of 100% of the issued and outstanding
stock of the License Subsidiary designated by the respective Station's call
letters:
CR Dallas KAHZ(AM) Fort Worth, Texas
CRKC KCNW(AM) Fairway, Kansas
CR Phoenix KIDR(AM) Phoenix, Arizona
CR Denver KKYD(AM) Denver, Colorado
CRLA KPLS(AM) Orange, California
CRC WAUR(AM) Sandwich, Illinois
CR Philadelphia WPWA(AM) Chester, Pennsylvania
CR Minneapolis WWTC(AM) Minneapolis, Minnesota
CRM WZER(AM) Xxxxxxx, Wisconsin; and
WHEREAS, the License Subsidiaries are the FCC licensees and/or
permittees of the Stations indicated above; and
WHEREAS, CRNY is the owner of the assets described herein relating
to the operation of radio station WJDM(AM), licensed to Elizabeth, New Jersey
("WJDM") except the FCC licenses, permits and authorizations issued with respect
to WJDM, and is the owner and holder of 100% of the issued and outstanding stock
of WJDM-AM, Inc. ("WJDM Co."), which is the FCC licensee and/or permittee of
WJDM; and
WHEREAS, subject to and conditioned upon the consent of the FCC,
the Sellers desire to sell and transfer and Buyer desires to purchase and
acquire substantially all of the tangible and intangible assets of the Sellers
used or held for use in connection with the operation of the Stations, and all
of the issued and outstanding stock of CRNY (the "CRNY Stock"), all as is more
fully described below.
NOW, THEREFORE, in consideration of the mutual promises, covenants
and conditions contained herein, the parties hereto hereby agree as follows:
ARTICLE 1
SALE AND TRANSFER OF ASSETS
At closing of the transactions described herein ("Closing"), the
Sellers shall sell, convey, assign, transfer and deliver to Buyer, free and
clear of any lien, encumbrance, interest, reservation, restriction, mortgage or
security interest of any nature whatsoever, except Permitted Encumbrances (as
defined in Section 1.10 below), all properties and assets, real and personal,
tangible and intangible, of every type and description owned by the Sellers and
used or held for use in connection with the operation of the Stations (except
for "Excluded Assets" as described in Section 1.9 below), including the business
and goodwill (collectively, the "Acquired Assets"). Without limiting the
foregoing, the Acquired Assets shall include the following, except to the extent
that any of the following are Excluded Assets:
1.1. All licenses, permits and authorizations issued by the Commission
for the operation of, or used in connection with, the operation of
the Stations, including but not limited to those listed on Schedule
A attached hereto, and all applications therefor, together with any
renewals, extensions or modifications thereof and additions
thereto, or applications filed between the date hereof and the
Closing Date (collectively, the "Licenses");
1.2. All of the Sellers' owned or leased real property interests of
every kind or description, or options or agreements to acquire real
property interests relating to the operation of the Stations,
including but not limited to that which is described in Schedule B
attached hereto(collectively, the "Real Property");
1.3. All tangible personal property of every kind and description owned
by the Sellers used or held for use in the operation of the
Stations, including but not limited to the property listed on
Schedule C attached hereto, and any additions, replacements
therefor or improvements thereof acquired or constructed prior to
Closing (collectively, the "Personal Property");
1.4. All of the Sellers' rights and benefits under the business
agreements, programming agreements, time sales agreements, real and
personal property leases, real property licenses and contracts in
connection with the operation of the Stations which, by their
terms, will survive Closing, including without limitation, those
listed on Schedule D attached hereto,
including any renewals, extensions, amendments or modifications
thereof, and any additional agreements, leases and contracts made
or entered into by the Sellers in the Ordinary Course of Business,
as defined in Section 6.5 hereof, approved in writing by Buyer,
between the date hereof and the Closing which, by their terms, will
survive Closing, (collectively, the "Contracts");
1.5. All other licenses, permits or authorizations issued by any
government or regulatory agency other than the FCC, which are used
or held for use in connection with the operation of the Stations,
all of which are listed on Schedule A and pending applications
therefor (collectively, the "Permits");
1.6. All right, title and interest of the Sellers in and to the use of
the call letters for the Stations (referred to herein as the "Call
Letters"), together with all common law property rights, goodwill,
copyrights, trademarks, service marks, trade names, patents,
jingles, logotypes, slogans and other similar rights used or held
for use in connection with the operation of the Stations, including
all accretions thereto, including without limitation, those listed
on Schedule E attached hereto, and including all right, title and
interest in and to the marks "KAHZ," "KIDR," "KKYD," "KPLS,"
"WAUR," "WJDM," "WPWA," "WWTC" and "WZER" (and the goodwill
appurtenant thereto) and all those acquired by Sellers between the
date hereof and Closing, and including all rights of Sellers in the
programming broadcast over the Stations, or used or held for use by
the Stations, whether recorded on tape or any other substance or
intended for live performances and whether completed or in
production, by the Stations (collectively, the "General
Intangibles");
1.7. All of the Sellers' magnetic media, electronic data processing
files, systems and computer programs, logs, public files, records
required by the FCC, vendor contracts, supplies, maintenance
records or similar business records relating to or used in
connection with the operation of the Stations, corporate records
and tax records of CRNY but not including records pertaining to
corporate affairs of Sellers (including tax records), provided
copies are supplied to Buyer. The Sellers shall have reasonable
access to all such records which might be in the possession of
Buyer for a period of two (2) years following the Closing, and
shall, at its own expense, have the right to make copies thereof;
1.8. All rights and claims of Sellers whether mature, contingent or
otherwise, against third parties relating to the Acquired Assets
including pre-paid items and deposits (subject to proration under
Section 4.3 hereof), whether in tort, contract, or otherwise,
including those under or pursuant to all warranties,
representations and guarantees made by manufacturers, suppliers or
vendors;
1.9. "Excluded Assets" are cash on hand, accounts receivable and those
assets specifically labeled and described on Schedules B through E
as Excluded Assets; and
1.10. "Permitted Encumbrances" shall be limited to liens for taxes not
yet due and payable, obligations of Sellers which Buyer expressly
assumes hereunder or expressly agrees to accept at Closing, and
with respect to Owned Real Property, Permitted Encumbrances shall
include those matters disclosed on title commitments delivered to
Buyer, relating to building and zoning laws, ordinances, state and
federal regulations, restrictions relating to use or improvements
of the property without effective forfeiture provisions,
reservation of mineral rights in states, utility and drainage
easements which do not interfere with existing improvements.
ARTICLE 2
SALE AND TRANSFER OF CRNY STOCK
At Closing, CBC shall sell, convey, assign, transfer and deliver to
Buyer, free and clear of any lien, encumbrance, interest, reservation,
restriction, mortgage or security interest of any nature whatsoever, the CRNY
Stock. The assets of CRNY and of WJDM Co. are labeled and described on the
appropriate Schedules described in Article 1 hereto (the "CRNY Assets"), all
representations and warranties contained herein relating to the Acquired Assets
are also being made by CBC with respect to the CRNY Assets, and the Acquired
Assets and the CRNY Assets are collectively referred to herein as the "Station
Assets." At Closing CRNY shall assign its accounts receivable to CBC and pay to
CBC an amount equal to the CRNY cash on hand.
ARTICLE 3
AGREEMENT REGARDING ADDITIONAL STATIONS
3.1. CBC has entered into letters of intent with third parties regarding
the purchase and sale of substantially all the assets of CBC or its
subsidiaries used or held for use in connection with the operation
of radio stations KTEK(AM), licensed to Alvin, Texas, KYCR(AM),
licensed to Golden Valley, Minnesota and WCAR(AM), licensed to
Livonia, Michigan (collectively, the "Additional Assets"). The
Additional Assets are described and separately identified on the
appropriate Schedules hereto. It is CBC's intent to negotiate and
enter into definitive purchase agreements with such third parties
in accordance with the terms of such letters of intent prior to
April 25, 1998, and to close upon the sales of the Additional
Assets to such third parties. In the event, however, that
definitive purchase agreements are not entered into with such third
parties before April 25, 1998, then the parties agree that this
Agreement shall be amended to include the Additional Assets with
the Acquired Assets. In such event, Article 4 shall be amended to
increase the purchase price by an amount equal to the Station
Aggregate Value (as defined in Section 4.6 hereof) of the Stations
being added to the Acquired Assets; CBC shall cause its
subsidiaries which hold the Additional Assets to join in this
Agreement; the parties shall join in preparing, submitting and
prosecuting appropriate applications or amendments to the
applications to the FCC for its consent to the assignment of the
Additional Assets; and both parties shall execute and deliver such
other documents and instruments necessary to effectuate the intent
expressed in this Article 3.
3.2. In the event such definitive agreements are entered into with the
third parties prior to April 25, 1998, Buyer shall have no further
obligations under this Article 3 with respect to the Additional
Assets, provided, however, that if the transactions to purchase the
Additional Assets are not consummated with the third parties in the
ordinary course and/or either or both of such agreements is
terminated, Buyer shall have the option, but not the obligation, to
purchase any or all of the Stations comprising the Additional
Assets for the Station Aggregate Value of such Stations. Buyer
shall have fifteen (15) business days following notice of
termination of an agreement to purchase Additional Assets to notify
Sellers of its exercise of such option. If notice is not given
within such time, the option shall expire.
If Sellers exercise any option to purchase Additional Assets
pursuant to this Section 3.2, the parties shall execute a
definitive purchase agreement containing terms consistent with the
terms set forth herein within ten (10) business days of receipt of
the notice of exercise.
ARTICLE 4
PURCHASE PRICE AND PAYMENTS
4.1. PURCHASE PRICE. As the purchase price for the Acquired Assets and
the CRNY Stock, Buyer agrees to pay to CBC the sum of Fifty-seven
Million and no/100 Dollars ($57,000,000.00), subject to adjustment
as provided herein (the "Purchase Price").
4.2. METHOD OF PAYMENT OF PURCHASE PRICE. The Purchase Price shall be
paid as follows:
4.2.1. Three Million and no/100 Dollars ($3,000,000.00) shall
be wire transferred to Seller's lender, Foothill
Capital Corporation ("Foothill") upon the execution of
this Agreement pursuant to a Deposit Escrow Account
Agreement in the form attached hereto as Exhibit A
(the "Deposit"). The Deposit shall serve to secure
Buyer's obligations under this Agreement and shall not
constitute payment of the Purchase Price unless so
applied by Buyer. Foothill shall hold the Deposit and
disburse it to CBC as follows:
(i) One Million and no/100 Dollars
($1,000,000.00) on the date of execution
hereof;
(ii) One Million and no/100 Dollars
($1,000,000.00) thirty (30) days from the
date hereof; and
(iii) One Million and no/100 Dollars
($1,000,000.00) sixty (60) days from the
date hereof.
In the event of a termination of this Agreement by
Sellers pursuant to Section 9.3(d) hereof, Sellers
shall be entitled to retain the Deposit as liquidated
damages in full and complete satisfaction of any and
all claims hereunder;
4.2.2. Forty-nine Million and no/100 Dollars ($49,000,000.00)
shall be paid to Sellers (or their designees to pay
off outstanding liens or encumbrances on the Station
Assets) in immediately available funds by wire
transfer at Closing;
4.2.3. Five Million and no/100 Dollars ($5,000,000.00) of the
Purchase Price payable hereunder shall be payable
pursuant to the terms of a promissory note in
substantially the form attached hereto as Exhibit B
(the "Note"). The Note will be secured by a lien upon
the Acquired Assets and the CRNY Assets pursuant to
the terms of a Security Agreement in the form
reasonably acceptable to counsel for Sellers, Buyer
and counsel for Buyer's principal lenders (the
"Security
Agreement"). The Security Agreement shall be executed
by Buyer and delivered to Sellers at Closing, and the
lien in favor of Sellers will be subordinated to the
liens of Buyer's lenders which finance the purchase of
the Acquired Assets or the CRNY Stock; and
4.2.4. At Closing, Buyer shall enter into and deliver an
escrow agreement substantially in the form attached
hereto as Exhibit C (the "Indemnity Escrow
Agreement"), for the purposes of securing Sellers'
indemnification obligations under Article 8 hereof
(the "Indemnity Escrow Account"). The Indemnity Escrow
Agreement shall be funded by CBC according to its
terms in the event that Buyer either elects to deliver
cash at Closing instead of the Note and Security
Agreement, or, in the event that Buyer exercises its
right after Closing to prepay the Note, such
prepayment shall be paid into the Indemnity Escrow
Account until fully funded before prepayments are paid
directly to Sellers.
4.3. ADJUSTMENTS AND PRORATIONS.
4.3.1. The operations of the Stations and WJDM and the income
and expenses attributable thereto up to 12:01 A.M. on
the day of the Closing shall, except as otherwise
provided in this Agreement be for the account of the
Sellers and thereafter shall be for the account of
Buyer. Expenses such as power and utility charges,
lease rents, property taxes according to year of
payment, frequency discounts, annual license fees (if
any), FCC regulatory fees, and similar deferred items
shall be prorated between the Sellers and the Buyer.
Prepaid deposits shall also be prorated between the
Sellers and the Buyer. The employment of all the
Stations' employees by the Sellers shall be terminated
as of the Closing Date, and Buyer may employ employees
of its choice and in its sole discretion from and
after said date upon terms acceptable to Buyer and
such employees. Any prorations shall be made and paid
insofar as feasible at the Closing, with a final
settlement within ninety (90) days after the Closing.
Any excess of $10,000 in aggregate trade balances for
the Stations and CRNY as of the Closing shall be paid
by Sellers to Buyer at Closing as a proration, and
positive trade balances shall inure to the benefit of
Buyer.
4.3.2. For purposes of the Closing, the adjustments and
prorations described in Section 4.3.1 (the "Proration
Amounts"), shall be estimated based on the most
current available data and made at Closing based upon
such estimates.
4.3.3. Sellers and Buyer shall attempt to agree on a final
determination of the Proration Amounts within 90 days
following the Closing Date. Immediately upon such
agreement, Sellers shall pay Buyer, or Buyer shall pay
Sellers, as the case may be, any amount owing by
reason of the difference between (A) the payment made
at Closing based on the estimated Proration Amounts
and (B) the Proration Amounts as finally determined.
If Sellers and Buyer shall not have reached an
agreement within 90 days following the Closing Date,
any dispute shall be referred to a "Big Six"
accounting firm that is not currently performing
services for either Buyer or
Sellers (the "Accountant"). The determination of the
Accountant shall be conclusive and binding upon
Sellers and Buyer, and a payment shall be made by
Buyer to Sellers or by Sellers to Buyer, as the case
may be, promptly upon such determination by the
Accountant to adjust the Proration Amounts. The fees
and expenses of the Accountant shall be allocated by
the Accountant to one or both of the parties based on
the principle that the party who does not
substantially prevail should bear the costs of the
Accountant.
4.4. PARTIAL AND ADDITIONAL CLOSING ADJUSTMENTS. Further adjustments to
the purchase price payable hereunder may be made pursuant to the
provisions of Sections 3, 6.9.5(c), 9.1, 9.2 and 10.3 below.
4.5. ASSUMED LIABILITIES. At Closing Buyer will assume the obligations
of Sellers under the Contracts subject to the provisions of Section
4.3. Except as expressly assumed by Buyer hereunder as provided for
in this Agreement, at the Closing Buyer shall not assume, incur or
be charged with, in connection with the transactions herein
contemplated, any liabilities or obligations of any nature
whatsoever, contingent or otherwise, in particular those arising on
or before the Closing Date. Without limitation of the foregoing,
Buyer shall not assume any obligations to the Stations' employees
under any employee benefit plans or employment contracts. Sellers
shall retain and discharge all such obligations and liabilities not
expressly assumed by Buyer hereunder.
4.6. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Acquired Assets and the CRNY Stock as set forth in the
attached Schedule F. The values of the Acquired Assets and the CRNY
Stock with respect to each of the Stations and WJDM are set forth
with an aggregate allocation value as to all Acquired Assets and
Additional Assets associated with the operation of each of the
Stations and CRNY set out thereon as the station aggregate value
(the "Station Aggregate Value") for each of the Stations and WJDM.
Such allocation will be used for all purposes, including
preparation and filing of IRS Form 8594 with respect to the
transactions contemplated by this Agreement.
ARTICLE 5
NON-COMPETITION AGREEMENT
At Closing, the parties shall enter into a Consulting and
Non-Competition Agreement (the "Non-Competition Agreement") in the form attached
hereto as Exhibit D pursuant to which Buyer shall pay to Xxxxxxxxxxx X. Xxxx the
sum of One Million Two Hundred Thousand and no/100 Dollars ($1,200,000.00)
according to the terms and conditions set forth therein.
ARTICLE 6
THE SELLERS' AND CRNY'S REPRESENTATIONS,
WARRANTIES AND AGREEMENTS
The Sellers, jointly and severally, with respect to all
representations, warranties and agreements contained in this Article 6, and
CRNY, with respect to all representations, warranties and agreements made by it
in this Article 6, hereby represent, warrant and agree as follows, which
representations and warranties shall be deemed to have been made again at
Closing and which agreements shall remain in effect from the date hereof until
such time as specified herein:
6.1. CORPORATE EXISTENCE AND POWERS. The Sellers are corporations
organized and existing in good standing under the laws of the State
of Minnesota, with full power and authority to enter into this
Agreement and to enter into and complete the transactions
contemplated herein and therein; CRNY is a corporation organized
and existing in good standing under the laws of the State of New
Jersey, with full power and authority to enter into this Agreement
and to enter into and complete the transactions contemplated
herein; CRC is, and will be at the time of Closing, qualified to do
business in the State of Illinois; CR Dallas is, and will be at the
time of Closing, qualified to do business in the State of Texas; CR
Denver is, and will be at the time of Closing, qualified to do
business in the State of Colorado; CRKC is, and will be at the time
of Closing, qualified to do business in the State of Kansas; CRLA
is, and will be at the time of Closing, qualified to do business in
the State of California; CRM is, and will be at the time of
Closing, qualified to do business in the State of Wisconsin; CRNY
is, and will be at the time of Closing, qualified to do business in
the State of New York; CR Philadelphia is, and will be at the time
of Closing, qualified to do business in the State of Pennsylvania;
and CR Phoenix is, and will be at the time of Closing, qualified to
do business in the State of Arizona; all required corporate actions
have been duly and validly taken by the Sellers and CRNY to make
and carry out this Agreement, which is a valid and binding
obligation of Sellers and CRNY and which is enforceable against
them in accordance with its terms; the execution of this Agreement
and the completion of the transactions contemplated herein will not
result in the violation of any of the charter documents of Sellers
or CRNY or any order, license, permit, rule, judgment or decree to
which any of the Sellers or CRNY is subject or the breach of any
Contract or cause the acceleration of any obligations under any
Contract; and, except for receipt of the Commission's Final
Approval (as defined herein) with respect to the assignment of the
Licenses and transfer of control to Buyer, no other consents of any
kind are required that have not been obtained for the Sellers or
CRNY to make or carry out the terms of this Agreement, except with
respect to those consents required of parties to Contracts listed
on Schedule D, with respect to assignment and assumption of
specific contract rights and obligations, and the consent of CBC's
shareholders. The Sellers shall use their best efforts to obtain
third party consents to assignment with respect to all of the
Contracts to the extent required by such documents. Buyer shall
reasonably cooperate with the Sellers in obtaining all such
required consents, but in no event shall Buyer be required to make
any payment to obtain such consents.
6.2. COMPLIANCE WITH LAWS; LICENSES AND PERMITS. Sellers and CRNY are
not subject to any notice asserting any noncompliance by Sellers or
CRNY, with any applicable statute, law, rule or regulation, whether
federal, state, local or otherwise, in connection with the
ownership of the Acquired Assets or the CRNY Assets or the
operation of the Stations or WJDM. Sellers and CRNY have complied
and are in compliance in all material respects
with all statute, laws, rules, regulations and governmental orders,
federal, state, local or otherwise applicable to Sellers' operation
of the Stations and CRNY's operation of WJDM and ownership of the
Acquired Assets and the CRNY Assets, except as disclosed on
Schedule A. With the exception of the Licenses which are addressed
below in this Section 6.2, Sellers and CRNY have obtained and
validly hold all permits, licenses and approvals, none of which has
been rescinded and all of which are in full force and effect, from
all Governmental Authorities (as defined herein) necessary in order
to conduct the operations of the Stations and WJDM in accordance
with applicable law, as presently conducted and to own, use and
maintain the Acquired Assets and the CRNY Assets, all of which
permits, licenses and approvals are identified on Schedule A. As
used herein, "Governmental Authorities" means any agency, board,
bureau, court, commission, department, instrumentality or
administration of the United States government, any state
government or any local or other governmental body in a state of
the United States or the District of Columbia. No filing or
registration with, notification to, or authorization, consent or
approval of, any Governmental Authority is required in connection
with the execution and delivery of this Agreement and the other
transactional documents by any Seller or CRNY or the performance by
any Seller or CRNY of its obligations hereunder or thereunder
except compliance with any applicable requirements of the
Communications Act of 1934 or as noted on Schedule A. Each of the
License Subsidiaries and WJDM Co. is the holder of the Licenses
indicated on Schedule A, all of which are valid, in full force and
effect and which have been unconditionally issued for the full
license term. The Licenses constitute all of the licenses, grants,
permits, waivers and authorizations issued by the FCC and required
for and/or used in the operation of the Stations and WJDM as they
are currently being operated. Each License Subsidiary and WJDM Co.
is fully qualified to hold its Licenses. All ownership and
employment reports, renewal applications, and other reports and
documents required to be filed for the Stations and WJDM have been
properly and timely filed, except as noted on Schedule A. The
Stations and WJDM are operating in all material respects in
accordance with the Licenses, and in compliance with the
Communications Act of 1934, as amended, and the rules and
regulations of the Commission, including, without limitation, those
regulations governing the Stations' and WJDM's equal employment
opportunity practices and public files, and any other applicable
laws, ordinances, rules and regulations, except as disclosed on
Schedule A. Sellers, CRNY and WJDM Co. have complied in all
material respects with all requirements of the FCC and the Federal
Aviation Administration with respect to the registration,
construction and/or alteration of Sellers' and CRNY's antenna
structures, and "no hazard" determinations for each antenna
structure have been obtained. The Licenses are unimpaired by any
act or omission of Sellers or CRNY or their officers, directors,
employees and agents and Sellers, CRNY and WJDM Co. will not,
without Buyer's prior written consent, by an act or omission,
surrender, modify, forfeit or fail to seek renewals on regular
terms, of any License, or cause the Commission or other regulatory
authority to institute any proceeding for the cancellation or
modification of any such License, or fail to prosecute with due
diligence any pending application to the Commission. There is not
now pending, nor to the best of Sellers' and CRNY's knowledge
threatened, any action by or before the Commission or other
regulatory authority to revoke, cancel, rescind, modify (except as
to any applications by the Sellers, CRNY or WJDM Co. shown on
Schedule A) or refuse to
renew in the ordinary course any of the Licenses, or any
investigation, order to show cause, notice of violation, notice of
inquiry, notice of apparent liability or of forfeiture or complaint
against the Stations, WJDM, Sellers, CRNY or WJDM Co., and Sellers,
CRNY and WJDM Co. have no knowledge of any basis for the
commencement of any such proceeding in the future, except as
disclosed on Schedule G. Should any such action or investigation be
commenced, order or notice be released, or complaint be filed,
Sellers or CRNY will promptly notify Buyer and take all actions
necessary to protect the Stations and WJDM and the Licenses from
any material adverse impact. All reports, statements and other
documents relating to the Stations or WJDM filed by the Sellers,
CRNY, WJDM Co. or the Stations with the FCC or any other
Governmental Authority were true, correct and complete in all
material respects when filed.
6.3. FINANCIAL STATEMENTS. CBC has delivered to the Buyer its unaudited
balance sheets dated December 31, 1996, and December 31, 1997 (the
latter of which are referred to herein as the "1997 Balance Sheet")
and unaudited statements of operations for the twelve months ended
December 31, 1996, and December 31, 1997 for each of the Stations
and WJDM and CRNY, other than KIDR(AM), as to which no 1996
financial statements have been delivered, and CBC's Form 10- KSB
for the year ended December 31, 1997, containing CBC's audited
consolidated financial statements for such period. The Sellers and
CRNY will deliver unaudited statements of operations for each of
the Stations and WJDM within fifteen (15) calendar days after their
preparation. Such financial statements and balance sheets and the
notes thereto are true, complete and accurate in all material
respects and fairly present the consolidated assets, liabilities
and financial condition of the Stations and WJDM as at the
respective dates thereof, and such statements of operations and the
notes thereto are true, complete and accurate in all material
respects and fairly present the results of operations for the
periods indicated, and all such financial statements, balance
sheets and statements of operations have been prepared in
accordance with generally accepted accounting principles
consistently applied throughout the periods involved, and properly
reflect all intercompany transfers.
6.4. NO UNDISCLOSED LIABILITIES. None of the Stations, nor CRNY nor WJDM
has any liabilities or obligations of any nature (absolute,
accrued, contingent or otherwise) which were not fully reflected or
reserved against in the 1997 Balance Sheet, except for liabilities
and obligations incurred in the Ordinary Course of Business and
consistent with past practice since the date thereof (none of which
liabilities and obligations is a liability for breach of contract,
tort, infringement or violation of law and all of which together
are not material in the aggregate); and the reserves reflected in
the 1997 Balance Sheets are adequate, appropriate and reasonable
under generally accepted accounting standards for a business of the
same type and nature as the Stations and WJDM.
6.5. ACQUIRED ASSETS AND THE CRNY ASSETS. The Acquired Assets and the
CRNY Assets to be transferred to Buyer at Closing represent all the
assets necessary for the Stations' and WJDM's current and
continuing operations; prior to Closing, none of the Acquired
Assets or the CRNY Assets will be sold, leased or otherwise
disposed of unless replaced by a substantially similar asset of
equal or greater value; Sellers have good, valid and
marketable title to all of the Acquired Assets and the Owned Real
Property, CRNY has good, valid and marketable title to all of the
CRNY Assets, and CBC has good, valid and marketable title to the
CRNY Stock, which, in each case, will at Closing be free and clear
of all security interests of every kind or character (other than
Permitted Encumbrances); Sellers and CRNY are the owners of all
items of Personal Property which are used in the operation of the
Stations and WJDM, respectively, and, at Closing, all of the
Acquired Assets and the CRNY Stock shall be owned by and
transferred by the Sellers to Buyer free and clear of all liens,
encumbrances, interests, restrictions or preemptive rights of any
kind whatsoever excepting only Permitted Encumbrances, and the CRNY
Assets shall be owned by CRNY and free and clear of all liens,
encumbrances, interests or restrictions of any kind whatsoever
excepting only the Permitted Encumbrances; the Acquired Assets and
the CRNY Assets have been maintained in good condition, subject to
normal wear and tear; the Sellers and CRNY have conducted the
business of the Stations and WJDM in the Ordinary Course of
Business as defined herein; and the Sellers and CRNY have not taken
any action that would be prohibited by Section 6.16. As used
herein, the term "Ordinary Course of Business" means, with respect
to Sellers and CRNY, the ordinary course of business of the
Stations and WJDM consistent with the past practices of Sellers and
CRNY subject to the disclosures set forth in Schedule K hereof
regarding material adverse changes since December 31, 1997. During
this period and for the period from the date hereof to Closing,
Sellers and CRNY have sought and intend to seek to enter into short
term time brokerage, sports broadcast and similar agreements. The
time may be brokered on an hourly or monthly basis, but such
agreements will not survive Closing except with Buyer's prior
written approval. The term Ordinary Course of Business shall also
include the contemplated move of WJDM's studio from the Liberty
Science Center, where most of the studio equipment currently being
utilized for WJDM's broadcasting (all of which is separately
identified on Schedule C), will be left with and assigned to the
lessor pursuant to the lease agreement for such real property set
forth on Schedule D. Prior to Closing, CBC will replace any studio
equipment necessary to assure continued operation of WJDM in the
new studio location.
6.6. REAL ESTATE.
6.6.1. OWNED PROPERTIES. Schedule B sets forth a list of all
real property owned by the Sellers or CRNY ("Owned
Real Property"). With respect to each parcel of Owned
Real Property, there are no leases, subleases,
licenses, concessions or other agreements, written or
oral, granting any person the right of use or
occupancy of any portion of such parcels except as
disclosed on Schedule B and there are no outstanding
actions or rights of first refusal to purchase such
parcels or any portion thereof or interest therein.
6.6.2. LEASED PROPERTIES. Schedule B sets forth a list of all
real property leased or licensed by the Sellers or
CRNY (the "Leased Real Property") and all of the
leases or licenses (the "Leases") of the Leased Real
Property. True and correct copies of all the Leases
have been provided to Buyer and have not been modified
or amended from such forms. With respect to the Leased
Real Property, except as set forth on
Schedule B, (a) all obligations of the landlord or
lessor under the Leases that have accrued have been
performed, and no landlord or lessor is in default
under or in arrears in the payment of any sum or in
the performance of any obligation required of it under
any Lease, and no circumstance presently exists, and
Sellers and CRNY have no knowledge of any circumstance
likely to occur, which, with notice or the passage of
time, or both, would give rise to a default by the
landlord or lessor under any Lease; (b) Sellers and
CRNY are not in default under or in the performance of
any obligation required of it under any Lease, and no
circumstance presently exists, and Sellers and CRNY
have no knowledge of any circumstance likely to occur,
which, with notice or the passage of time, or both,
would give rise to a default by Sellers under any
Lease; and (c) there are no consents of any landlord
or lessor required to transfer the Leased Real
Property to Buyer.
6.6.3. TITLE AND DESCRIPTION. Sellers or CRNY hold, and will
convey to Buyer at Closing free and clear of any liens
or encumbrances of any kind or nature excepting only
Permitted Encumbrances, a valid and enforceable
freehold interest in the Owned Real Property and valid
and enforceable leasehold interests (or interest as a
licensee, as the case may be) in the Leased Real
Property pursuant to the Leases as shown on Schedule
B, subject only to the right of reversion of the
landlord or lessor under the Leases and the terms
thereof.
6.6.4. PHYSICAL CONDITION. There is no material defect in the
physical condition of any improvements located on or
constituting a part of the Owned Real Property, or to
the best of Sellers' and CRNY's knowledge, the Leased
Real Property. The Real Property, including, without
limitation, such improvements, is in good condition
and repair and is adequate for the uses to which it is
being put, and the Real Property, except as disclosed
on Schedule B, is not in need of maintenance or
repairs except for ordinary, routine maintenance and
repairs which are not material in nature or cost. The
soil condition of the Owned Real Property is such that
it will support all of the improvements thereon for
the foreseeable life of the improvements without the
need for unusual or new subsurface excavations, fill,
footings, caissons or other installations, and the
same is true with respect to the Leased Real Property
to the best of Sellers' and CRNY's knowledge.
6.6.5. UTILITIES. All water, sewer, gas, electric, telephone,
drainage and other utility equipment, facilities and
services required by law or necessary for the
operation of the Owned Real Property as it is now
improved and operated are installed and connected
pursuant to valid permits, are sufficient to service
the Owned Real Property and are in good operating
condition except in such case as will not materially
detract from the marketability or value of the Owned
Real Property and do not impair the operations of the
lessee thereof, and the same is true with respect to
the Leased Real Property, to the best of Sellers' and
CRNY's knowledge.
6.6.6. COMPLIANCE WITH LAW; GOVERNMENTAL APPROVALS. The Owned
Real Property is not in violation of any zoning,
building, fire, water, use, health, or other law,
ordinance, code, regulation, license, permit or
authorization issued in respect of any of the Owned
Real Property, and the same is true with respect to
the Leased Real Property, to the best of the Sellers'
and CRNY's knowledge, and Sellers and CRNY know of no
such violation or violations that now exist that would
materially detract from the marketability or value of
the Real Property or impair the operations of the
occupant thereof in any material respect. Improvements
located on or constituting a part of the Owned Real
Property and the construction, installation, use and
operation thereof (including, without limitation, the
construction, installation, use and operation of any
signs located thereon) are in material compliance with
all applicable municipal, state, federal or other
governmental laws, ordinances, codes, regulations,
licenses, permits and authorizations, including,
without limitation, applicable zoning, building, fire,
water, use, or health laws, ordinances, codes,
regulations, licenses, permits and authorizations, and
there are presently in effect all certificates of
occupancy, licenses, permits and authorizations
required by law, ordinance, code or regulation or by
any governmental or private authority having
jurisdiction over the ownership or operation of the
Sellers' or CRNY's businesses or any of the Acquired
Assets and CRNY Assets, including the Stations and
WJDM and the Owned Real Property or any portion
thereof, or the occupancy thereof or any present use
thereof, except such non-compliance as will not
materially detract from the marketability or value of
the Owned Real Property and do not impair the occupant
thereof or the operations of the Stations in any
respect, and the same is true with respect to the
Leased Real Property, to the best of Sellers' and
CRNY's knowledge. All such approvals required by law,
ordinance, code, regulation or otherwise to be held by
the occupant of any of the Real Property shall be
transferred to Buyer at Closing. There is legally
enforceable pedestrian, vehicular and handicapped
access to the Owned Real Property, and to the best of
Sellers' knowledge, to the Lease Real Property to the
extent, with respect to handicapped access to any Real
Property, that it legally required.
6.6.7. REAL PROPERTY TAXES. There are no pending or, to the
best of Sellers' and CRNY's knowledge, threatened
special assessment or reassessment of all or any
portion of any of the Owned Real Property, and there
are no pending or threatened special assessment or
reassessment of all or any portion of the Leased Real
Property, to the best of Sellers' and CRNY's
knowledge, except as disclosed on Schedule B.
6.6.8. CONDEMNATION. There is no pending or, to the best of
Sellers' knowledge, threatened condemnation of all or
any part of the Real Property.
6.6.9. INSURABILITY. Sellers and CRNY have not received any
notice from any insurance company of any defects or
inadequacies in the Real Property or any part thereof.
6.7. CONTRACTS, LEASES, AGREEMENTS, ETC. Each of the Contracts is in
full force and effect, and there are no outstanding notices of
cancellation, acceleration or termination in connection therewith
except as noted upon Schedule D. The Contracts listed on Schedule D
are all the contracts and agreements to which Sellers or CRNY are a
party in connection with
the operations of the Stations and WJDM which will survive Closing
and are all that are necessary for the operation of the Stations
and WJDM as presently conducted. Sellers and CRNY are not in breach
or default in connection with any of the Contracts, except as noted
on Schedule X. Xxxxxxx and CRNY have made available to Buyer true
and correct copies of all Contracts listed on Schedule D, and will
make available to Buyer true and correct copies of any additional
Contracts and any additional agreements, leases and contracts
relating to the operation of the Stations entered into by the
Sellers or CRNY in the Ordinary Course of Business, or as approved
by Buyer as provided in Section 1.4 hereof. On the Closing Date
there will be no Contracts relating to the Stations and WJDM (not
including this Agreement) which will be binding on the Buyer other
than those specifically identified herein in Schedule D attached
hereto, or as otherwise approved in writing by Buyer.
6.8. LITIGATION AND TAXES.
6.8.1. Except as set forth on Schedule G, no strike, labor
dispute, investigation, litigation, court or
administrative proceeding is pending or, to the best
of Sellers' and CRNY's knowledge, threatened against
the Sellers or CRNY relating to the Stations or WJDM,
their employees or any of the Acquired Assets or the
CRNY Assets or the CRNY Stock, and Sellers and CRNY
know of no basis for any such possible action. Sellers
and CRNY have filed all applicable federal, state,
local and foreign tax returns required to be filed to
date, in accordance with provisions of law pertaining
thereto, and, except as set forth on Schedule G have
paid all FCC regulatory fees, taxes, interest,
penalties and assessments (including without
limitation income, withholding, excise unemployment,
Social Security, occupation, transfer, franchise,
property, sales and use taxes, import duties or
charges, and all penalties and interest in respect
thereof) required to have been paid to date with
respect to or involving the Stations, WJDM, the
Acquired Assets, the CRNY Assets or the CRNY Stock.
Sellers and CRNY have not been advised that any of
their returns, federal, state, local or foreign, have
been or are being audited as of the date hereof.
6.9. ENVIRONMENTAL MATTERS.
6.9.1. ENVIRONMENTAL REPRESENTATION. Each Seller and CRNY is
in compliance in all material respects with all
applicable federal, state and local laws and
regulations relating to pollution or protection of
human health or the environment ("Environmental Laws")
(which compliance includes, but is not limited to, the
possession by such Sellers and CRNY of any and all
permits and other governmental authorizations required
under applicable Environmental Laws and compliance
with the terms and conditions thereof) with respect to
the Real Property and the business of the Stations and
WJDM. No Seller or CRNY has received any communication
(written or oral), whether from a Governmental
Authority, citizens' group, employee or otherwise,
alleging that any Seller or CRNY is not in such
compliance, and to the Sellers' and CRNY's knowledge,
there are no past or present actions, activities,
circumstances, conditions, covenants or incidents
that may prevent or interfere with such compliance in
the future. Except as disclosed on Schedule B, Sellers
and CRNY have not participated in nor approved, nor
has there occurred, to the best of their knowledge,
any production, disposal or storage on the Real
Property of any hazardous waste or toxic substance,
nor does such waste or substance exist on the Owned
Real Property (above or beneath the surface), nor on
Leased Real Property, to the best of Sellers' and
CRNY's knowledge, nor is there any proceeding or
inquiry, by any governmental authority (federal or
state) with respect to the presence of such waste or
substance on the Owned Real Property or, to the best
of the Sellers' and CRNY's knowledge, on the Leased
Real Property, nor are there any underground storage
tanks on the Owned Real Property or, to the best of
Sellers' and CRNY's knowledge, on the Leased Real
Property. There is no Environmental Claim (as defined
below) pending, or to the knowledge of Sellers and
CRNY, threatened against any Seller or CRNY with
respect to the Real Property or the business of the
Stations or WJDM or, to the best of the Sellers' and
CRNY's knowledge, against any person whose liability
for any Environmental Claim any Seller or CRNY has or
may have retained or assumed either contractually or
by operation of law. There are no past or present
actions, activities, circumstances, conditions, events
or incidents with respect to the Owned Real Property,
or to the best of Sellers' and CRNY's knowledge with
respect to the Leased Real Property, any Seller or
CRNY or the business of the Stations or WJDM that
could form the basis of any Environmental Claim
against any Seller or CRNY or against any person whose
liability for any Environmental Claim any Seller or
CRNY has or may have retained or assumed either
contractually or by operation of law. As used herein,
"Environmental Claim" means any claim, action, cause
of action, investigation or notice (written or oral)
by any person alleging potential liability arising out
of, based on or resulting from (a) the presence or
release of any hazardous waste at any location,
whether or not owned or operated by any Seller or
CRNY, (b) circumstances forming the basis of any
violation of any Environmental Law or (c)
circumstances requiring the removal, abatement,
investigation or remediation of Hazardous Waste.
"Hazardous Waste" shall consist of the substances
defined as "hazardous substances," "hazardous
materials," or "toxic substances" in the Comprehensive
Environmental Response Compensation and Liability Act
of 1980, as amended, 42 USC ss.9601, et seq., or in
the Hazardous Materials Transportation Act, 49 USC
ss.1801, et seq., or in the Resources Conservation and
Recovery Act, 42 USC ss.6901, et seq., and all
substances defined as "hazardous waste" under the
Statutes of the States of Arizona, California,
Colorado, Illinois, Kansas, Michigan, Minnesota, New
Jersey, Pennsylvania, Texas and Wisconsin (with
respect to Real Property located in such states) or
any regulations adopted pursuant to those statutes,
including, but not limited to, asbestos and asbestos
containing materials.
6.9.2. ENVIRONMENTAL COVENANTS. Sellers and CRNY have
provided Buyer with all information, surveys and
reports in each Seller's and CRNY's or each Station's
or WJDM's possession or control concerning the
existence or possible existence of any underground
storage tanks, polychlorinated biphenyls, asbestos or
asbestos-
containing materials, radon gas, radioactive
materials, liquid petroleum or liquid petroleum
products, or other hazardous wastes, and any other
reports, studies or documents in each Seller's or
CRNY's or each Station's or WJDM's possession relating
to each Seller's or CRNY's or each Station's or WJDM's
potential violation or liability under applicable
Environmental Laws ("Environmental Contamination").
6.9.3. BUYER'S RIGHT TO CONDUCT DUE DILIGENCE. By May 15,
1998, Buyer may, at its expense, conduct Phase I
environmental assessment activities of the Real
Property (subject to any requirement, condition and
limitation set forth in the Leases with respect to
Leased Real Property), including inspecting individual
sites, submitting environmental questionnaires to
Sellers and CRNY and the employees of the Stations and
WJDM and reviewing existing environmental reports,
correspondence, permits and related materials
regarding the Real Property. Phase I environmental
assessment activities shall not include any sampling
or intrusive testing other than hand auger soil
testing and testing for asbestos or
asbestos-containing materials. Buyer may retain one or
more outside environmental consultants to assist in
its environmental due diligence concerning the Real
Property.
6.9.4. RESULTS OF ENVIRONMENTAL DUE DILIGENCE. In the event
that Sellers' or CRNY's disclosure pursuant to Section
6.9.2 herein or the Phase I reports obtained by Buyer
pursuant to Section 6.9.3 herein or any other
information regarding the Real Property obtained by
Buyer produces evidence that Environmental
Contamination exists or may exist on any of the Real
Property, Buyer shall, within ten (10) business days
after receiving the applicable Phase I report or
information, notify CBC of such findings, provide CBC
with copies of all reports, written assessments or
other material regarding such contamination, and shall
have the right to conduct Phase II environmental
activities of the Real Property (including, but not
limited to, the taking and analysis of soil, surface
water and ground water samples, testing of buildings,
drilling xxxxx and taking soil borings, but subject to
any requirement, condition or limitation set forth in
the Leases with respect to Leased Real Property). The
Phase II environmental activities shall also be at the
Buyer's expense. The Sellers agree to cooperate with
the Buyer and with all third parties in permitting the
Buyer to obtain in a timely manner the Phase I Reports
and the Phase II Reports.
6.9.5. EFFECT OF ENVIRONMENTAL DUE DILIGENCE RESULTS.
(a) Subject to Section 6.9.5(b) below, either
party hereto may terminate this Agreement
insofar as it relates to the affected
Station or Buyer may at its option
terminate this Agreement in its entirety
(unless the affected Station is WZER(AM),
KCNW(AM), KYCR(AM), WCAR(AM) or KTEK(AM)
[the "Severable Stations"], in which
event Buyer may only terminate this
Agreement under this Section 6.9.5 with
respect to the affected Severable
Station), by written
notice to the other party within fifteen
(15) business days after Buyer's
notification to Sellers of Environmental
Contamination if:
(i) the results of Buyer's
environmental due diligence
investigations indicate the
existence of Environmental
Contamination of any of the
parcels of Real Property;
and
(ii) Both parties reasonably
determine (on the basis of
Buyer's environmental due
diligence) that responding
to and remediating the
foregoing Environmental
Contamination in accordance
with applicable
environmental laws will
exceed One Hundred Thousand
and no/100 Dollars
($100,000.00) (the
"Remediation Ceiling
Amount") with respect to the
facilities used in the
operations of any one of the
Stations. In the event the
parties disagree regarding
this determination, each
party shall name a qualified
environmental consultant,
they shall in turn name a
third whose determination
shall be final.
(b) If the results of Buyer's environmental
due diligence conducted in accordance
with this Section 6.9 indicate that the
cost of responding to and remediating
Environmental Contamination in accordance
with applicable environmental laws is
equal to or less than the Remediation
Ceiling Amount for the facilities used in
the operations of any Station, Sellers
shall, at their sole cost and expense,
respond to and remediate such
Environmental Contamination in accordance
with applicable environmental laws on or
before the Closing. The completion of
such remediation to the reasonable
satisfaction of Buyer shall be a
condition to the Closing of this
Agreement pursuant to Section 11.4(g)
hereof.
(c) In the event that a termination as to a
Station becomes effective under this
Section 6.9.5, the Purchase Price shall
be adjusted by reducing it by an amount
equal to 110% of the Station Aggregate
Value of the affected Station.
6.9.6. RADIO FREQUENCY RADIATION. Other than in compliance
with the Communications Act, the operation of the
Stations and WJDM does not cause or result in exposure
of workers or the general public to levels of radio
frequency radiation in excess of the radio frequency
protection guides set forth in OST/OET Bulletin Number
65, "Evaluating Compliance with FCC-Specified
Guidelines for Human Exposure to Radio-Frequency
Radiation." Renewal of the FCC Licenses would not
constitute a "major action" within the meaning of
Section 1.1301, et seq., of the FCC's rules.
6.10. INSURANCE. The Sellers and CRNY shall maintain in full force and
effect all of their existing casualty, liability, and other
insurance covering any or all of the Acquired Assets and the CRNY
Assets through the day following the Closing Date in amounts not
less than those in effect on the date hereof; Sellers have set
forth on Schedule H an abstract of such casualty insurance
coverage. Such coverage is for full replacement value against risks
commonly insured against in the radio broadcast industry and
neither Sellers nor CRNY are in default under any such policies.
Neither Sellers nor CRNY have received any notice from any issuer
of such policies of its intention to cancel, terminate or refuse to
renew any policy issued by it.
6.11. ACCESS TO INFORMATION. The Sellers and CRNY shall give Buyer and
its representatives reasonable access during normal business hours
throughout the period prior to Closing to the operations,
properties, books, accounting records, contracts, agreements,
leases, commitments, programming, technical and sales records and
other records of and pertaining to the business and operations of
the Stations and WJDM; provided, however, such access shall not
unreasonably disrupt the Sellers' or CRNY's normal operation. The
Sellers and CRNY shall furnish to Buyer all information concerning
CBC's, the Sellers', the Stations' and WJDM's affairs as Buyer may
reasonably request, including, but not limited to, information
regarding the status of Sellers' loan agreement with Foothill, and
Buyer shall provide CBC with such information regarding Buyer's
affairs as CBC reasonably requests. Each party will maintain the
confidentiality of all the information and materials delivered to
it or made available for its inspection by the other hereunder.
Nothing shall be deemed to be confidential information that: (a) is
known to the party to whom it was disclosed at the time of its
disclosure; (b) becomes publicly known or available other than
through disclosure by the disclosing party; (c) is received by the
party to whom it was disclosed from a third party not actually
known by the disclosing party to be bound by a confidentiality
agreement with or obligation to the disclosing party; or (d) is
independently developed by the party to whom it was disclosed as
clearly evidenced by its records. Notwithstanding the foregoing
provisions of this Section 6.11, a party may disclose such
confidential information (x) to the extent required (in the opinion
of the disclosing parties independent legal counsel) to comply with
applicable laws and regulations, (y) to its officers, directors,
employees, representatives, financial advisors, attorneys,
accountants, and agents with respect to the transactions
contemplated hereby (so long as such parties are informed of the
confidentiality of such information), and (z) to any Governmental
Authority in connection with the transactions contemplated hereby.
In the event this Agreement is terminated, each party will return
to the other all confidential information disclosed pursuant hereto
relating to the transactions contemplated hereunder, whether
obtained before or after the execution of this Agreement.
6.12. CONDUCT OF THE STATIONS' AND WJDM'S BUSINESS. Until Closing,
without the prior written consent of Buyer, the Sellers and CRNY
shall not enter into any transaction, agreement or understanding
other than in the Ordinary Course of Business which will not
survive Closing, or, if any such agreement survives Closing, such
agreement shall have a value less than $5,000 and be terminable
without penalty no later than sixty (60) days after Closing
(whether or not in writing), or modify any of the Contracts; no
employment contract shall
be entered into by the Sellers or CRNY relating to the Stations or
WJDM unless the same is terminable at will and without penalty at
any time; no material increase in compensation payable or to become
payable, to any of the employees employed at the Stations or WJDM
shall be made; no material change in personnel policies, insurance
benefits or other compensation arrangements shall be made; and the
Sellers and CRNY will cause the Stations and WJDM to be operated in
all material respects in compliance with the Licenses and Permits
and all applicable laws and regulations; the Sellers further
represent, warrant and covenant:
(a) Between the date hereof and Closing, the Sellers and
CRNY shall not take any action which will prevent or
impede Buyer from obtaining at the Closing the actual
and immediate occupancy and possession of the Stations
and WJDM and all of the Acquired Assets and the CRNY
Assets, including the Real Property, except that
Sellers, notwithstanding anything to the contrary
contained herein, shall have no obligation to close
upon the Vander Eyk property under the purchase
agreement disclosed on Schedules B and D (the "Vander
Eyk Agreement"). Sellers will exercise their best
efforts to perform all their obligations under the
Vander Eyk Agreement and to preserve the rights to
close thereunder. Sellers will also exercise their
best efforts to perform all their obligations under
the WONZ option agreement disclosed on Schedule D and
to preserve their rights to exercise said option
pursuant to its terms.
(b) Between the date hereof and Closing, Sellers shall
complete repairs to the WJDM tower site to Buyer's
reasonable satisfaction and shall complete the move of
the WJDM studio to the 0 Xxxxxxxx Xxxxxx, Xxxxxxxxx,
Xxx Xxxxxx location and replace all tangible personal
property left at the Liberty Science Center location.
(c) On the Closing date, the Sellers will be the owner of
the Acquired Assets and CRNY will be the owner of the
CRNY Assets with good and marketable title thereto,
free and clear of all liens and encumbrances, except
for Permitted Encumbrances; and that between the date
of this Agreement and the Closing, there will be no
more than the ordinary normal wear and tear and
expendability of the Acquired Assets and the CRNY
Assets, and the Acquired Assets and the CRNY Assets
will be in good working condition.
(d) Except as disclosed on Schedule G, the Sellers and
CRNY do not know of any facts relating to them or the
Stations or WJDM which would cause (i) the
applications for assignment of the Licenses and
transfer of control to Buyer to be challenged, (ii)
the Commission to deny its consent to the assignments
of the Licenses and transfer of control to Buyer, or
(iii) the Commission to grant such applications for
assignment and transfer of control subject to material
adverse conditions to Buyer.
(e) The Sellers and CRNY will have duly filed all tax
returns required to be filed by such Seller or CRNY on
or before the Closing Date and will have paid and
discharged all taxes, assessments, excises, levies, or
other similar charges of every kind, character or
description imposed by any Governmental Authority, and
any interest, penalties or additions to tax imposed
thereon or in connection therewith (collectively,
"Taxes") which are due and payable and have not been
paid. There is no action, suit, proceeding, audit,
investigation or claim pending or, to the Sellers' and
CRNY's knowledge, threatened in respect of any Taxes.
(f) The Sellers and CRNY shall (i) upon receiving notice
or otherwise becoming aware of any violation relating
to the Licenses, any violation by any of the Stations
or WJDM of any of the rules and regulations of the
FCC, or any violations under any other applicable laws
and regulations, promptly notify Buyer and, at
Sellers' expense, use its best efforts to cure all
such violations prior to the Closing Date, (ii)
promptly notify Buyer in writing if a Station or WJDM
ceases to broadcast at the power levels it is
broadcasting at as of the date hereof for more than 48
consecutive hours; such notice shall specify the
reason or reasons for such cessation and the
corrective measures taken or to be taken by Sellers,
and (iii) promptly inform Buyer in writing of any
variances from the representations and warranties
contained in this Article 6 that become known to the
Sellers and CRNY or any breach of any covenant or
agreement hereunder by Sellers or CRNY.
6.13. COPYRIGHTS, TRADEMARKS AND SIMILAR RIGHTS. The call letters listed
on Schedule E are the call letters used by Sellers or CRNY during
the radio broadcast operations of the Stations and WJDM to identify
each of the respective Stations and WJDM to its audience. Sellers
and CRNY have full right and authority from the FCC to use such
call letters. Sellers have not licensed or consented to, and have
no knowledge of, any other entity's or individual's use of such
call letters. There is no other name, trademark, service xxxx,
copyright, or other trade, or service right or xxxx currently being
used in the business and operations of the Stations or WJDM other
than those listed in Schedule E, except those of CBC in connection
with its Radio AAHS(R)/Aahs World Radio(sm) children's radio
format. Sellers and CRNY pay no royalty to anyone for use of the
General Intangibles and have the right to bring action for the
infringement thereof by third parties. Sellers and CRNY represent
and warrant that the operations of the Stations and WJDM do not
infringe on any trademark, service xxxx, copyright or other
intellectual property or similar right owned by others.
6.14. EMPLOYEES. Sellers shall be solely responsible for any and all
liabilities and obligations Sellers or CRNY may have to the
employees of the Stations and WJDM, including, without limitation,
compensation, severance pay, incentive bonuses, health expenses,
and accrued vacation time, sick leave and obligations under any of
Sellers' or CRNY's employee benefit plans. Sellers acknowledge that
Buyer has no obligation hereunder to offer employment to any
employee of Sellers or CRNY; however, Buyer shall have the right to
hire such of the employees of the Stations and WJDM as Buyer may
select in its sole discretion. With respect to any employee that
Buyer hires, Sellers further acknowledge that Buyer shall
have no obligation for, and shall not assume as part of the
transaction contemplated by this Agreement, any compensation,
incentive bonuses, health expenses, "accrued vacation" or other
accrued leave time of said employees as a consequence of their
being hired by Buyer, and Buyer shall have no liability for any
such compensation due any employee for service prior to the Closing
Date. Sellers also acknowledge that with respect to such employees
as may be hired by Buyer, and where any such compensation,
incentive bonuses, health expenses, or accrued leave time exists
for said employees, Sellers will retain the responsibility for any
liability arising therefrom. The consummation of the transactions
contemplated hereby will not cause Buyer to incur or suffer any
liability relating to, or obligation to pay, severance,
termination, or other payments to any person or entity for
employment by Sellers, CRNY, the Stations or WJDM, or any liability
under any employee benefit plans of Sellers or CRNY, including,
without limitation, any liability under the Internal Revenue Code
of 1986, as amended, or the Employee Retirement Income Security Act
of 1974, as amended. Sellers shall comply with the provisions of
the Worker Adjustment and Retraining and Notification Act and
similar laws and regulations, if applicable, and shall be solely
responsible for any and all liabilities, penalties, fines, or other
sanctions that may be assessed or otherwise due under such
applicable laws and regulations on account of the dismissal or
termination of the employees of the Stations and WJDM by Sellers
and CRNY.
6.15. LABOR RELATIONS. Schedule I lists the names, dates of hire and
current annual salaries of all persons employed by the Sellers or
CRNY directly and principally in connection with the operation of
the Stations and WJDM. None of the Sellers nor CRNY is a party to
or subject to any collective bargaining agreements with respect to
any of the Stations or WJDM. Sellers and CRNY have no written or
oral contracts of employment with any employee of the Stations or
WJDM, other than (i) oral employment agreements terminable at will
without penalty, or (ii) those listed in Schedule D. The Sellers
and CRNY, in the operations of the Stations and WJDM, have complied
with all applicable laws, rules and regulations relating to the
employment of labor, including those related to wages, hours,
collective bargaining, occupational safety, discrimination and the
payment of social security and other payroll related taxes, except,
with respect to the payment of taxes by CRNY, as disclosed on
Schedule J. To the best of Sellers' and CRNY's knowledge, there is
no representation or organizing effort pending or threatened
against or involving or affecting the Sellers or CRNY with respect
to employees employed at any of the Stations or WJDM.
6.16. PRE-CLOSING COVENANTS. Between the date hereof and the Closing, the
Sellers, CRNY and WJDM Co. covenant that:
6.16.1. FCC COMPLIANCE. The Sellers and CRNY shall continue to
operate the Stations and WJDM in material conformity
with the terms of the Stations' and WJDM's Licenses
and in conformity in all material respects with all
applicable laws, regulations, rules and ordinances,
including but not limited to the rules and regulations
of the FCC. The Sellers, CRNY and WJDM Co. shall file
all reports, applications and other filings required
by the FCC in a timely and accurate
manner. Sellers, CRNY and WJDM Co. will maintain the
Licenses in full force and effect and take any action
necessary before the FCC to preserve such Licenses in
full force and effect without material adverse change.
Sellers, CRNY and WJDM Co. will not take any action
that would jeopardize the License Subsidiaries' or
WJDM Co.'s rightful possession of the Licenses, the
potential for assignment or transfer of control of the
Licenses to Buyer, or the unconditional renewal of the
Licenses for full license terms. The Sellers and CRNY
shall continue to prosecute any pending applications
before the FCC and shall pay any regulatory fees as
they become due.
6.16.2. CONDUCT OF BUSINESS. The Sellers and CRNY shall
conduct the business and technical operations of the
Stations in the Ordinary Course of Business, and shall
continue all practices, policies, procedures and
technical operations relating to the Stations in
substantially the same manner as heretofore.
6.16.3. MAINTENANCE OF ASSETS. The Sellers shall maintain all
of the Acquired Assets and the CRNY Assets in a good
condition and, with respect to the Personal Property,
shall maintain inventories of spare parts at levels
consistent with the past practices of the Sellers,
CRNY, the Stations and WJDM. The Sellers and CRNY
shall not sell, convey, assign, transfer or encumber
any of the Acquired Assets or the CRNY Assets, except
for the retirement of tangible Acquired Assets or CRNY
Assets consistent with the normal and customary
practices of the Sellers, CRNY, the Stations and WJDM,
which will be replaced prior to Closing.
6.16.4. NO SOLICITATION.
(a) Sellers will immediately cease any
existing discussions or negotiations with
any third parties conducted prior to the
date hereof with respect to any
Acquisition Proposal (as defined below).
Sellers shall not, directly or
indirectly, through any officer,
director, employee, representative or
agent, or otherwise (i) solicit,
initiate, continue or encourage any
inquiries, proposals or offers that
constitute, or could reasonably be
expected to lead to, a proposal or offer
for a merger, consolidation, business
combination, sale of substantially all
the assets or a sale of at least a
majority of capital stock (including,
without limitation, by way of a tender
offer) (a "Fundamental Transaction")
involving any of the Sellers, CRNY, or
any of the Stations or WJDM, other than
the transactions contemplated by this
Agreement, or a Fundamental Transaction
involving CBC conditioned upon
termination of this Agreement (any of the
foregoing inquiries or proposals are
being referred to in this Agreement as an
"Acquisition Proposal"), (ii) solicit,
initiate, continue or engage in
negotiations concerning, or otherwise
cooperate in any way with, or assist or
participate in, or facilitate or
encourage any Acquisition Proposal, or
(iii) agree to, approve or recommend any
Acquisition Proposal; provided, that,
solely to the extent required in the
exercise of the fiduciary duties of the
Board of Directors of CBC under
applicable law as advised by independent
counsel in connection with an unsolicited
Acquisition Proposal, nothing contained
in this Section shall prevent CBC from,
prior to the Closing, furnishing
non-public information to, or entering
into discussions or negotiations with,
any person or entity in connection with
any unsolicited Acquisition Proposal by
such person or entity (including a new
and unsolicited Acquisition Proposal
received by CBC after the execution of
this Agreement from a person or entity
whose initial contact with CBC may have
been solicited by CBC prior to the
execution of this Agreement), and CBC may
recommend such an unsolicited bona fide
written Acquisition Proposal to the
shareholders of CBC, if and only to the
extent that (x) the Board of Directors of
CBC determines in good faith (after
consultation with and based upon the
advice of its financial advisor and
considering the effect of such
Acquisition Proposal upon the employees,
customers and the community) that such
Acquisition Proposal would, if
consummated, result in a transaction more
favorable to the shareholders of CBC than
this Agreement and that the person or
entity making such Acquisition Proposal
has the financial means, or the ability
to obtain the necessary financing, to
conclude such transaction (any such more
favorable Acquisition Proposal is being
referred to in this Agreement as a
"Superior Proposal"), (y) the Board of
Directors of CBC determines in good faith
(after consultation with and based upon
the advice of its outside legal counsel)
that the failure to take such action
would be inconsistent with the fiduciary
duties of such Board of Directors to its
shareholders under applicable law, and
(z) prior
to furnishing such non-public information
to, or entering into discussions or
negotiations with, such person or entity,
the Board of Directors receives from such
person or entity an executed
confidentiality agreement. At such time
as a Triggering Event occurs (as defined
below), or at such time as CBC shall
materially breach or fail to perform its
obligations under this Section 6.16.4.,
then Sellers shall pay Buyer a fee of
Five Million and no/100 Dollars
($5,000,000.00) (the "Fee"), together
with an amount equal to the Deposit,
which amounts shall be payable by wire
transfer of same day funds on the date of
such Triggering Event or material breach
as and for liquidated damages. The Fee
shall be non-refundable, except that in
the event that this Agreement is not
terminated by Sellers or Buyer, the
applications before the FCC seeking its
grant to the proposed assignments and
transfer of control are not withdrawn by
Sellers or Buyer, and Closing occurs in
the ordinary course, the Fee will be
reimbursed to Sellers at Closing and the
entire Purchase Price shall be paid by
Buyer without giving credit to the
payment of the Deposit which had been
returned to Buyer.
(b) CBC shall reimburse the Buyer in
connection with any legal or other fees
incurred by the Buyer in connection with
the collection of the Fee or the Deposit
from CBC.
(c) As used herein, a "Triggering Event"
shall mean any of the following:
(i) the Board of Directors of
CBC shall have withdrawn or
modified its recommendation
of this Agreement or shall
have resolved or publicly
announced its intention to
do so; or
(ii) an alternative transaction
shall have taken place or
the Board of Directors of
CBC shall have recommended
such an alternative
transaction to shareholders,
or shall have resolved or
publicly announced its
intention to recommend or
engage in an alternative
transaction; or
(iii) An executive officer or
director of CBC, or any
other person at their
direction, shall have
negotiated with any person
other than Buyer or its
affiliates, based on a
determination regarding a
"Superior Proposal" made as
described herein;
(iv) An executive officer or
director of CBC, or any
other person at their
direction, shall have, or
CBC or any other Seller or
CRNY shall have entered into
a letter of intent or any
agreement with, or
consummated or recommended
any transaction with, any
person other than Buyer or
its affiliates, based on a
determination regarding a
"Superior Proposal" made as
described herein; or
(v) the shareholders of CBC do
not approve this Agreement
or the transactions
contemplated hereby after an
Acquisition Proposal shall
have been publicly
announced.
6.16.5. SHAREHOLDER MEETING. CBC shall, in accordance with the
requirements of applicable law, its Articles of
Incorporation and its Bylaws, take all action as may
be necessary, proper or advisable to duly call, give
notice of and fix a record date for a meeting of
shareholders (which may be a special or annual
meeting) to vote on approval of this Agreement and the
transactions contemplated hereby (the "Shareholders'
Meeting"), to be held as promptly as practicable and
in any event not later than August 30, 1998. As
promptly as practicable, CBC shall prepare and file
with the Securities and Exchange Commission (the
"SEC") a proxy statement (the "Proxy Statement") to be
used in connection with the solicitation of proxies
for the Shareholders' Meeting, respond to any comments
or requests from the SEC, as applicable, and mail the
Proxy Statement, together with any materials required
to be delivered to CBC shareholders under applicable
law, to shareholders of CBC in accordance with the
requirements of applicable law. CBC represents,
warrants and covenants that the Proxy Statement will
comply with all requirements of applicable law,
including without limitation SEC Regulation 14A.
Subject to its fiduciary duties in connection with a
Superior Proposal (as defined above), the Board of
Directors of CBC shall recommend in the Proxy
Statement that the shareholders of CBC approve this
Agreement and the transactions contemplated hereby.
CBC shall provide a copy of the proposed Proxy
Statement to Buyer prior to filing.
6.16.6. OTHER SELLER COVENANTS. None of the Sellers nor CRNY
shall without the Buyer's prior written consent (a)
merge or consolidate with or into any other entity,
except as permitted under Section 12.10 hereof; (b) do
or omit to do any act (or permit such action or
omission) which will cause a material breach of any of
the Contracts identified as material on Schedule D;
(c) waive any claims or rights of material value with
respect to the Station Assets, or with respect to the
operations of the Stations or WJDM without the prior
written consent of Buyer; or (d) agree, whether in
writing or otherwise, to do any of the foregoing.
6.16.7. TERMINATION. This Agreement may be terminated in its
entirety by Buyer or Sellers, subject to the
provisions hereof, in the event of the occurrence of a
Triggering Event described in Sections 6.16.4(c)(i),
(ii), (iv) or (v) herein.
6.17. NO MISLEADING STATEMENTS. No statement, representation or warranty
made by Sellers or CRNY herein and no information provided or to be
provided by Sellers or CRNY to Buyer pursuant to this Agreement or
any other documents delivered hereunder or in connection with the
negotiations covering the purchase and sale contemplated herein
contains or will contain any untrue statement of a material fact,
or omits or will omit a material fact. There are no facts or
circumstances known to Sellers or CRNY and not disclosed herein or
in the Schedules hereto that, either individually or in the
aggregate, will materially adversely
affect after Closing the Acquired Assets or the CRNY Assets or the
condition of the Stations or WJDM.
6.18. CONSENTS. The Sellers shall use their best efforts to obtain any
third party consents required to assign to Buyer all Contracts. If,
on the Closing Date, Sellers have not obtained any required consent
for the assignment of any Contract (other than the material
Contracts referred to in Section 11.4(d) hereof) to Buyer and the
Closing occurs, then after the Closing Date, Sellers will continue
to use their best efforts, and the Buyer will cooperate with
Sellers, to obtain any such consent and/or to remove any other
impediments to the assignment of any such Contract. From and after
the Closing, until the valid assignment of all such Contracts,
Sellers will take such lawful actions as are reasonably necessary
to assure that Buyer shall receive the benefits of, and shall be
obligated to perform the obligations of Sellers under, all such
Contracts after the Closing Date to the same extent as if Buyer
were a party thereunder (and Buyer agrees to cooperate with Sellers
in connection with any such actions and to enter into, at the time
of the Closing, any lawful arrangements in furtherance thereof (but
at no additional cost to Buyer other than such costs as Buyer would
incur as a party to such Contracts)).
6.19. CBC'S ADDITIONAL REPRESENTATIONS REGARDING CRNY.
6.19.1. ORGANIZATION, OWNERSHIP AND CAPITALIZATION OF CRNY.
CRNY is a New Jersey corporation duly organized,
validly existing and in good standing under the laws
of the State of New Jersey with all requisite power,
authority, charters, licenses and franchises necessary
or required by law to carry on the business activity
in which it is presently engaged. Other than as set
forth on Schedule J, CRNY is not in default under any
such charter, license or franchise, the effect of
which might materially adversely affect its right to
conduct the business and there are no pending
proceedings or actions to limit or impair any of
CRNY's powers, rights and privileges or to dissolve
CRNY. CBC has provided Buyer with true and correct
copies of the Articles of Incorporation, as amended to
the date hereof, and Bylaws of CRNY, as amended to the
date hereof. CRNY has no subsidiaries other than WJDM
Co. nor is it a partner in any partnership or a party
to any joint venture. The authorized capital stock of
CRNY consists of 425 shares of Common Stock, no par
value per share, 250 of which are issued and
outstanding. All outstanding shares of CRNY Stock are
validly issued, fully paid and nonassessable, and all
of such shares are owned, beneficially and of record,
by CBC, and there are no other classes of stock,
options, warrants or conversion privileges
outstanding. CBC has good and marketable title to the
CRNY Stock, and CBC will transfer the CRNY Stock to
the Buyer on the Closing Date, free and clear of any
claim, lien, pledge, security, interest, charge, or
other encumbrance whatsoever. The CRNY Stock is not
subject to any option or right to purchase other than
pursuant to this Agreement, and no preemptive rights
exist with respect to the CRNY Stock. Other than as
specified in Schedule J, all which tax Sellers will
pay prior to Closing, there are no stock transfer
taxes applicable with respect to the transfer of the
CRNY Stock to Buyer.
6.19.2. RECORD BOOKS. The minute book and stock record book of
CRNY as delivered to Buyer is complete and correct in
all material respects, except as disclosed on Schedule
J.
6.19.3. TAXES. Except as disclosed on Schedule J:
(i) CRNY is a corporation for purposes of
federal and state income tax laws and has
had the tax status of a corporation
constantly and without interruption since
June 1, 1996, and, to the best of
Sellers' and CRNY's knowledge, from its
formation to such date;
(ii) all returns have been or will be timely
filed when due in accordance with all
applicable laws;
(iii) all taxes shown on the returns have been
or will be timely paid when due;
(iv) the returns completely, accurately and
correctly reflected or will reflect the
facts regarding the income, properties,
operations and status of CRNY since June
1, 1996, and, to the best of Sellers and
CRNY's knowledge, for prior periods;
(v) there are no agreements or consents
currently in effect for the extension or
waiver of the time:
(a) to file any return; and
(b) for assessment or collection
of any taxes relating to
CRNY for any pre-Closing
period, and no person has
been requested to enter into
any such agreement or
consent;
(vi) all returns with respect to taxable years
ending on or prior to December 31, 1996,
have been examined and closed, or are
returns with respect to which the
applicable statute of limitations, after
giving effect to any extensions and
waivers, has expired;
(vii) all taxes which CRNY is required by law
to withhold or collect have been duly
withheld or collected, and have been
timely paid over to the appropriate
governmental authorities to the extent
due and payable;
(viii) there is no action, suit, proceeding,
investigation, audit or claim currently
pending, or to the best of Sellers' or
CRNY's knowledge, threatened, regarding
any taxes relating to CRNY for any
pre-Closing period;
(ix) all tax deficiencies which have been
claimed, proposed or asserted against
CRNY have been fully paid or finally
settled and no issue has been raised
by any IRS examination that might result
in a proposed deficiency for any other
period not so examined;
(x) no material deficiencies with respect to
taxes, additions to tax, interest, or
penalties have been proposed or asserted
against and communicated to CRNY or
Sellers except those that have been paid
in full and for those matters that would
not result in liability being imposed
against CRNY;
(xi) no person has executed or entered into a
closing agreement pursuant to IRS Code
Section 7121 (or any comparable provision
or state, local or foreign law) that is
currently in force and determines the tax
liabilities of CRNY;
(xii) there is no, and will not be any,
agreement or consent made under IRS Code
Section 341(f) (or any comparable
provision or state, local or foreign law)
affecting CRNY;
(xiii) there are no liens for any tax, other
than statutory liens for taxes not yet
due and payable and the taxes due but not
yet paid as disclosed on Schedule J, on
the assets of CRNY;
(xiv) none of the assets of CRNY directly or
indirectly secures any debt the interest
on which is tax exempt under IRS Code
Section 103(a);
(xv) CRNY has not engaged in any transaction
that could give rise to an understatement
of tax liability of CRNY within the
meaning of IRS Code Section 6662(d)(2);
(xvi) there are no tax sharing agreements to
which CRNY is now or ever has been a
party;
(xvii) as of and after the Closing, CRNY shall
not be required to:
(a) treat any asset of CRNY as
owned by another person
pursuant to the "safe
harbor" leasing provisions
of the IRS Code or as
"tax-exempt use property"
within the meaning of IRS
Code Section 168(h); and
(b) apply any of the foregoing
rules under any comparable
foreign, state or local tax
provision;
(xviii) CRNY is not a party to any agreement,
contract, arrangement or plan that would
result, separately or in the aggregate,
in the payment of any "excess parachute
payments" within the meaning of IRS Code
Section 280G (or any comparable provision
of state, local, or foreign law);
(xix) CRNY has not agreed, and is not required,
to make any adjustment under IRS Code
Section 482(a) ( or any comparable
provision of state, local or foreign law)
by reason of a change in accounting
method or otherwise;
(xx) no property of CRNY is subject to a tax
benefit transfer lease subject to the
provisions of former Section 168(f)(8) of
the Internal Revenue Code of 1954;
(xxi) CRNY has complied fully with all
applicable laws relating to information
reporting and withholding or collection
and payment over of taxes with respect to
payments made to or received from third
parties;
(xxii) CRNY is not a party to a "disqualified
leaseback or long-term agreement"
described in Section 467(b)(4) of the
Code;
(xxiii) no power of attorney is currently in
effect, and no tax ruling has been
requested of any governmental authority,
with respect to any tax matter relating
to CRNY;
(xxiv) the charges, accruals, and reserves for
taxes, other than income taxes, due or
accrued but not yet due, relating to the
properties and operations of CRNY for the
period prior to Closing as reflected on
its books are reflected as accrued
liabilities and will be adequate in all
material respect to cover such taxes; and
(xxv) New Jersey is the only state in which
CRNY has filed tax returns during the
past three years, and New Jersey and New
York are the only states in which CRNY
expects to file tax returns during the
current calendar year.
6.19.3. After the Closing Date, Buyer shall have the exclusive
authority and obligation to prepare and file, or cause
to be prepared and filed, all returns for, or with
respect to, taxes for all taxable years and other
taxable years and other taxable periods; provided,
however, that returns with respect to the income,
properties or operation of CRNY that relate to the
taxable year or other taxable period which includes
the Closing Date shall, to the extent permitted by
applicable law, be prepared by treating all items on
such returns in a manner consistent with the past
practices of CRNY with respect to such items. Sellers
and CRNY expressly consent to the use of the so-called
"closing of the books method" as to the taxable period
before and after the Closing Date. Prior to the
Closing, neither Sellers nor CRNY nor any person
acting on their behalf shall file or cause to be filed
any amended return without the prior written consent
of Buyer, which consent shall not be unreasonably
withheld.
6.19.4. CREDIT AGREEMENTS. At Closing, CRNY will not be a
party to or bound by any written or oral debt
agreement, credit agreement, sale-lease back
agreement,
revolving credit agreement, financing agreement or
mortgage on real property, except as set forth on
Schedule D.
6.19.5. EMPLOYEE PLANS. CRNY has not established any oral or
written Employee Plan for the employees thereof except
as set forth on Schedule J to this Agreement. For
purposes of this Agreement, Employee Plan means any
pension, retirement, disability, medical, dental or
other health insurance plan, life insurance or other
death benefit plan, profit sharing, deferred
compensation, stock option, bonus or other incentive
plan, vacation benefit plan, severance plan, or other
employee benefit plan or arrangement, including,
without limitation, any "pension plan" or "welfare
plan" as defined by the Employee Retirement Income
Security Act of 1974 ("ERISA"). Each Employee Plan set
forth on Schedule J to this Agreement has been
administered to date or terminated, as the case may
be, in compliance with the requirements of the
Internal Revenue Code and ERISA, where applicable each
Employee Plan is fully funded on a termination basis,
and all reports required by any government agency with
respect to such plans have been timely filed, and
notwithstanding anything to the contrary contained in
such plan and except as disclosed on Schedule J, all
benefits, liabilities and obligations of CRNY to date
under such plan have been fully accrued and reflected
on the Financial Statements. A complete and accurate
copy of each Employee Plan set forth on Schedule J to
this Agreement has been delivered to Buyer along with
all related determination letters and filings for the
most recent plan year.
6.20. SUPPLEMENTAL DISCLOSURE. From time to time prior to the Closing,
the Sellers and CRNY will promptly supplement or amend the
Schedules hereto with respect to any matter hereafter arising
which, if existing or occurring at the date of the Agreement, would
have been required to be set forth or described in such Schedules.
No supplement or amendment of any Schedule made pursuant to this
Section shall be deemed to amend, modify or update any
representation or warranty of Sellers or CRNY made in this
Agreement or cure any breach thereof unless Buyer specifically
agrees thereto in writing.
6.21. MATERIAL ADVERSE CHANGE. Since December 31, 1997, there has not
been any material adverse change in the operation of the Stations
or WJDM or condition of the Station Assets except as disclosed on
Schedule K. As used in this Agreement, a "material adverse change"
shall expressly include any event which would prevent Buyer from
consummating the purchase of Real Property contemplated under the
Vander Eyk Agreement on the terms and conditions as reflected
therein as of the date hereof or from constructing its KPLS tower
array thereon in the ordinary course without a material increase in
the costs of acquisition and construction understood by Buyer as of
the date hereof. Buyer understands that the current budget for land
acquisition and construction of the project is approximately Four
Million and no/100 Dollars ($4,000,000.00).
ARTICLE 7
BUYER'S REPRESENTATIONS AND WARRANTIES
The Buyer represents and warrants as follows, which representations
and warranties shall be deemed to have been made again at Closing.
7.1. CORPORATE EXISTENCE AND POWERS. Buyer is a limited liability
company organized and existing in good standing under the laws of
the State of California with full power and authority to enter into
this Agreement to which it is a party and enter into and complete
the transactions contemplated herein and therein; Buyer is, or will
be at the time of Closing, qualified to do business in the States
of Arizona, California, Colorado, Illinois, Kansas, Minnesota, New
York, New Jersey, Pennsylvania, Texas and Wisconsin; all required
corporate action has been duly and validly taken by Buyer to make
and carry out this Agreement and the transactions contemplated
herein; this Agreement constitutes the valid and binding obligation
of Buyer enforceable in accordance with its terms; the execution of
the Agreement and, once the consents of the FCC required for the
assignment and transfer of control of the Licenses are obtained,
the completion of the transactions herein involved will not result
in the violation of any order, license, permit, rule, judgment or
decree to which Buyer is subject or the breach of any contract,
agreement or other commitment to which Buyer is a party or by which
it or its properties is bound or conflict with or violate any
provision of Buyer's Articles of Organization, Operating Agreement,
or other organizational documents; and except for the consents of
the Commission to the assignments of the Licenses and the transfer
of control to Buyer and the consents identified by the Sellers on
Schedule D, to the Buyer's knowledge, no other consent of any kind
is required that has not been obtained for Buyer to make or carry
out the terms of this Agreement.
7.2. BUYER'S QUALIFICATIONS. At Closing, Buyer will be legally and
financially qualified to become the licensee of the Commission.
Buyer does not know of any facts relating to it which would cause
the Commission to deny its consents, or which would materially
hinder or delay receipt of such consents, to the assignments of the
Licenses and transfer of control to Buyer.
7.3. INVESTMENT REPRESENTATION. Buyer is purchasing the CRNY Stock for
investment purposes and not with a view to distribution. The CRNY
Stock has not been registered under Federal or State securities
laws and Buyer understands that no redistribution, sale or other
disposition of the CRNY Stock may occur unless the CRNY Stock is
registered under applicable Federal and State securities laws or
exempt therefrom.
ARTICLE 8
BREACH OF AGREEMENTS,
REPRESENTATIONS AND WARRANTIES
8.1. BREACH OF THE SELLERS' AGREEMENTS, REPRESENTATIONS AND WARRANTIES.
The Sellers shall jointly and severally indemnify and hold harmless
Buyer and every affiliate of Buyer and
any of its or their directors, members, managers, stockholders,
officers, partners, employees, agents, consultants,
representatives, transferees and assignees (collectively, the
"Buyer Indemnities") from and against any loss, damage, liability,
claim, demand, judgment or expense, including claims of third
parties, and including without being limited to, reasonable counsel
fees and reasonable accounting fees, sustained by the Buyer
Indemnities by reason of, or arising out of or relating to, (i) any
material breach of any warranty, representation, covenant or
agreement of the Sellers or CRNY contained herein or in any other
document delivered pursuant to the terms hereof or in the Schedules
attached hereto, (ii) any error contained in any statement, report,
certificate or other instrument delivered to the Buyer Indemnities
by Sellers or CRNY pursuant to this Agreement, (iii) any failure by
Sellers or CRNY to pay or discharge any liability relating to the
Stations, CRNY and WJDM that is not expressly assumed by Buyer
hereunder, (iv) any facts or circumstances described in Schedule G,
(v) the failure to comply with any applicable bulk sales or tax
notice statutes, or (vi) any obligations for unpaid taxes,
penalties and interest with respect to CRNY noted on Schedule J.
Each Seller hereby expressly waives all rights of equitable
indemnity, subrogation and contribution, whether by contract,
statute or common law with respect to CRNY for the indemnification
obligations of Sellers to the Buyer Indemnities contained herein.
8.2. BREACH OF BUYER'S AGREEMENTS, REPRESENTATIONS AND WARRANTIES. Buyer
shall indemnify and hold harmless the Sellers and every affiliate
of Sellers and any of their directors, members, stockholders,
officers, partners, employees, agents, consultants,
representatives, transferees and assignees (collectively, the
"Seller Indemnities") from and against any loss, damage, liability,
claim, demand, judgment or expense, including claims of third
parties, and including without being limited to, reasonable counsel
fees and reasonable accounting fees, sustained by the Seller
Indemnities by reason of, or arising out of or relating to, (i) any
material breach of any warranty, representation, covenant or
agreement of Buyer contained herein or any other document delivered
pursuant to the terms hereof, (ii) any error contained in any
statement, report, certificate or other instrument delivered to the
Seller Indemnities by Buyer pursuant to this Agreement, or (iii)
any failure by Buyer to pay or discharge any liability relating to
the Stations, CRNY and WJDM that is expressly assumed by Buyer
hereunder.
8.3. THRESHOLD. Neither Buyer nor Seller shall be liable to the other
for indemnification under this Article 8 until the aggregate of all
indemnification claims of the party seeking indemnification exceeds
$25,000.00, but after such threshold is exceeded, the applicable
party shall be entitled to full indemnification for all claims.
8.4. SPECIFIC PERFORMANCE. Sellers acknowledge that the Acquired Assets
and the CRNY Stock to be transferred and assigned under this
Agreement are unique and not readily bought or sold on the open
market and, for that reason, among others, Buyer would be
irreparably harmed by any breach or failure of the other party to
consummate this Agreement, and monetary damages therefor will be
highly difficult, if not wholly impossible, to ascertain, except as
provided under Section 6.16.4 hereof. It is therefore agreed that
this Agreement shall be enforceable by Buyer in a court of equity
by a decree of specific performance, and an injunction may be
issued restraining any transfer or assignment of the Acquired
Assets, the CRNY Stock or the CRNY Assets contrary to the
provisions of this Agreement pending the determination of such
controversy. Sellers and CRNY, for themselves and their successors
and assigns, hereby waive the claim or defense that an adequate
remedy at law exists. In the event of a suit by Buyer to obtain
specific performance and Buyer's prevailing in such action, Buyer
shall be entitled to reimbursement by Sellers of all reasonable
attorneys' fees and other out-of-pocket expenses incurred by Buyer
with respect thereto.
8.5. PROCEDURES. The indemnified party agrees to give written notice
within a reasonable time to the indemnifying party of any claim or
other assertion of liability which could give rise to a claim for
indemnification hereunder (hereinafter collectively "Claims," and
individually a "Claim"), it being understood that the failure to
give such notice shall not affect the indemnified party's
obligation to indemnify as set forth in this Agreement, unless, and
then only to the extent, the indemnifying party's ability to
contest, defend or settle with respect to such Claim is thereby
demonstrably and materially prejudiced by such failure to give such
notice. The obligations and liabilities of the parties hereto with
respect to their respective indemnities pursuant to this Article 8
resulting from any Claim, shall be subject to the following
additional terms and conditions:
(a) Provided the indemnifying party acknowledges in
writing its obligation to indemnify the indemnified party with
respect to the Claim and further satisfies the indemnified party as
to its financial ability to satisfy such indemnification
obligation, the indemnifying party shall have the right to
undertake, by counsel or other representatives of its own choosing,
the defense or opposition to such Claim.
(b) In the event that the indemnifying party shall
either (i) elect not to undertake, or shall fail to satisfy any
requirements to undertake, such defense or opposition, or (ii) fail
to properly elect within thirty (30) days after notice of any such
Claim from the indemnified party or thereafter fail to defend or
oppose such Claim, then, in either such event, the indemnified
party shall have the right to undertake the defense, opposition,
compromise or settlement of such Claim, by counsel or other
representatives of its own choosing, on behalf of and for the
account and risk of the indemnifying party.
(c) Notwithstanding anything in this Section 8.5 to
the contrary, (i) the indemnifying party shall not, without the
indemnified party's written consent, settle or compromise any Claim
or consent to entry of any judgment which includes any admission of
liability or does not include as a term thereof the giving by the
claimant or the plaintiff to the indemnified party of an
unconditional release from all liability in respect of such Claim,
and (ii) in the event that the indemnifying party undertakes
defense of or opposition to any Claim, the indemnified party, by
counsel or other representative of its own choosing and at its sole
cost and expense, shall have the right to consult with the
indemnifying party and its counsel or other representatives
concerning such Claim and the indemnifying party and the
indemnified party and their respective counsel or other
representatives shall cooperate in good faith with respect to such
Claim.
(d) The indemnifying party hereby agrees to pay the
amount of any established Claim within fifteen (15) days after the
establishment thereof. The amount of established Claims shall be
paid in cash. Any amounts for such Claims not paid when due under
this Article shall bear interest at a rate equal to 15% per annum
until paid. Buyer shall have the right to offset any unpaid amounts
with respect to a Claim against the amounts due Sellers under the
Note.
ARTICLE 9
RISK OF LOSS; TERMINATION
9.1. BUYER'S OPTIONS. The risk of any loss, damage or destruction to any
of the Station Assets from fire or other casualty or loss shall be
borne by the Sellers and CRNY at all times prior to the Closing.
Upon the occurrence of any material loss or damage to any of the
Station Assets as a result of fire, casualty, or other causes prior
to the Closing, the Sellers shall notify the Buyer of same in
writing immediately, stating with particularity the reasonable
estimates of the loss or damage incurred, the cause of damage, if
known, and the extent to which restoration, replacement and repair
of the Station Assets lost or destroyed is believed reimbursable
under any insurance policy with respect thereto. Provided the
Sellers, at their sole expense, have not repaired, restored or
replaced the damaged Station Assets to Buyer's reasonable
satisfaction by the Closing, and if the Buyer is not then in
material breach of this Agreement, Buyer shall have the option (but
not the obligation) exercisable at the Closing to:
(i) terminate this Agreement in its entirety in which case
none of the parties shall have any further liability
to the other parties with respect thereto, or
terminate this Agreement solely as to the affected
Station, in which case the Purchase Price shall be
reduced by an amount equal to 110% of the Station
Aggregate Value of the affected Station so excluded,
except that the Sellers shall have a reasonable period
of time, not to exceed sixty (60) days, to effect
repairs of the damaged Station Assets before Buyer may
exercise its option under this subparagraph 9.1(i),
provided, however, that in the event the affected
Station is a Severable Station, Buyer shall not have
the option to terminate the entire Agreement under
this Section 9.l(i), but shall only have the option to
terminate this Agreement with respect to the affected
Station;
(ii) postpone the Closing of the affected Station for up to
sixty (60) days as necessary to allow the property to
be completely repaired, replaced or restored, at the
Sellers' sole expense, in which event the Sellers
shall use their best efforts to complete such repairs;
or
(iii) elect to consummate the Closing and accept the damaged
Station Asset in its "then" condition, in which event
the Sellers or CRNY shall assign to Buyer all rights
under any insurance claim covering the loss and pay
over to the Buyer the proceeds under any such
insurance policy previously received by the Sellers
and
CRNY with respect thereto, provided further that
Buyer's election to proceed with the Closing under
this Section 9.1(iii) shall not relieve Sellers of any
of the indemnification obligations under Article 8
hereof with respect to damaged Station Assets.
9.2. BROADCAST TRANSMISSION OF THE STATIONS PRIOR TO CLOSING. If, prior
to the Closing Date, any Station incurs any unusual operating
problems (including any event described below), Sellers shall
provide Buyer with prompt written notice of such problem and the
measures being taken, at Sellers' sole expense, to correct same.
If, after the date hereof and prior to the Closing Date, any event
occurs which prevents the broadcast transmission of any Station or
WJDM for (i) a period of 72 consecutive hours or more, or (ii) six
(6) separate periods of four (4) hours or more, Buyer shall have
the right, by giving written notice to the Sellers of its election
to do so, to terminate this Agreement in its entirety or solely
with respect to the affected Station, provided, however, in the
event the affected Station is a Severable Station, Buyer shall not
have the option to terminate the entire Agreement under this
Section 9.2, but shall only have the option to terminate the
Agreement with respect to the affected Station. In the event Buyer
decides to terminate this Agreement with respect to the affected
Station, the Purchase Price shall be reduced by an amount equal to
110% of the Station Aggregate Value of the affected Station so
excluded, except that the Sellers shall have a reasonable period of
time, not to exceed sixty (60) days, to effect repairs of the
damaged Station Assets before Buyer may exercise its option under
this subparagraph 9.2.
9.3. TERMINATION OF AGREEMENT. This Agreement may be terminated at any
time on or prior to the Closing Date: (a) by the mutual consent of
Sellers and Buyer; (b) by any non-defaulting party hereto if within
ten (10) calendar days after the date hereof, applications for FCC
consent to the assignment and transfer of control of the Licenses
to Buyer that are acceptable for filing, subject to reasonable
supplementation and modification, has not been tendered for filing
with the FCC (provided that the non-defaulting party shall have
used all reasonable efforts to cooperate in the preparation of such
application); (c) by any party hereto if the FCC has denied the
approvals contemplated by this Agreement in an order which has
become Final or granted a hearing on an objection; (d) by written
notice of either Buyer or Sellers/CRNY if the other party breaches
in any material respect any of its representations, warranties,
covenants or agreements contained herein and such breach has not
been cured within thirty (30) days of the date of notice of breach
is received by the breaching party, provided, however, that no
notice of intention to terminate this Agreement pursuant to this
Section 9.3(d) may be served by a party that is itself in material
breach of the Agreement at the time of such notice; (e) by Buyer as
provided under Section 6.9.5 (regarding Environmental Matters); (f)
by Sellers or Buyer as provided under Section 6.16.7 (regarding a
Superior Offer or certain Triggering Event); (g) by Buyer as
provided in Section 9.1 (regarding casualty losses); (h) by Buyer
as provided under Section 9.2 (regarding broadcast transmission);
(i) by Buyer as provided under Section 10.3 (regarding FCC
designation for hearing); (j) by any non-defaulting party hereto if
the Closing has not taken place by the Outside Closing Date (as
defined in Section 10.4), (k) by Buyer if not then in material
default if Sellers have failed to satisfy the conditions set forth
in Section
11.4, or (l) by Sellers if not then in material default if Buyer
has failed to satisfy the conditions set forth in Section 11.5.
9.4. EFFECT OF TERMINATION. In the event this Agreement is terminated as
provided in Section 9.3, this Agreement shall be deemed null, void
and of no further force or effect, and the parties hereto shall be
released from all future obligations hereunder; provided that the
provisions of Sections 9.4, 10.2, 12.3, and 12.12 shall survive
such termination, and provided further that the termination of this
Agreement shall not relieve any party of liability for its material
breach of this Agreement, provided however, that, if this Agreement
is terminated by Sellers pursuant to Section 9.3(d) due to material
breach or default by the Buyer of this Agreement, and provided the
Sellers are not then in material breach or default of this
Agreement, the Sellers shall retain the Deposit as liquidated
damages, it being agreed that such payment shall constitute full
payment for any and all damages suffered by Sellers and CRNY by
reason thereof and that Sellers and CRNY shall have no rights to or
claims for damages from Buyer other than the Deposit. Sellers
hereby acknowledge that Sellers shall not be entitled to the
Deposit if this Agreement is terminated for any reason other than
by Sellers pursuant to Section 9.3(d) above, and if this Agreement
is terminated other than by Sellers pursuant to Section 9.3(d), the
Deposit shall be returned to Buyer.
ARTICLE 10
APPLICATION FOR COMMISSION APPROVAL
10.1. FILING AND PROSECUTION OF APPLICATION. Buyer and the Sellers shall,
as soon as practicable after the date of this Agreement and in any
event not later than ten (10) calendar days after the date hereof,
join in applications to be filed with the Commission requesting its
written consents to the assignments of the Licenses of the Stations
from the License Subsidiaries to Buyer and the transfer of control
of WJDM from WJDM Co. to Buyer. The parties shall prepare their own
portions of the applications. Buyer, Sellers and CRNY shall take
all steps necessary to the expeditious prosecution of such
applications to a favorable conclusion, using their best efforts
throughout.
10.2. EXPENSES. The parties shall bear their own legal, accounting and
other expenses in connection with the consummation of the
contemplated transaction except as otherwise specifically provided
herein. The parties shall cooperate with the preparation of the
Commission applications and in connection with the prosecution of
such applications. The filing fees shall be shared equally between
the Sellers on the one hand and the Buyer on the other.
10.3. DESIGNATION FOR HEARING. If, for any reason, any application for an
assignment or transfer of control of any of the Licenses is
designated for hearing by the Commission prior to grant thereof,
the Buyer, if not then in material breach hereunder, shall have the
right, but not the obligation, by written notice within thirty (30)
days of such designation for hearing, to terminate this Agreement,
in which case none of the parties shall have any further liability
to the other parties with respect thereto, or terminate this
Agreement solely as to the Station that is the subject of the
hearing, in which case the Purchase Price shall be reduced by an
amount equal to 110% of the Station Aggregate Value of the affected
Station so excluded, provided, however, in the event the affected
Station is a Severable Station, Buyer shall not have the right to
terminate the entire Agreement under this Section 10.3, but shall
only have the option to terminate this Agreement with respect to
the affected Station.
10.4. OUTSIDE CLOSING DATE. Subject to the provisions of Section 10.3
above, if within twelve (12) months from the date hereof (the
"Outside Closing Date") (i) the Commission has not given its
written consents to the assignments and transfer of control of the
Licenses set forth herein or (ii) the other conditions to the
obligations of Buyer or Sellers have not been fulfilled then any of
the parties, if not then in default, may terminate this Agreement
in its entirety. Upon such termination, if not otherwise in
material breach or default of this Agreement, none of the parties
shall have any right or liability hereunder, and the Deposit shall
be returned to Buyer.
10.5. CONTROL OF STATIONS. Until Closing, Buyer shall not directly or
indirectly, control, supervise, direct or attempt to control,
supervise or direct the operations of the Stations or WJDM, but
such operations shall be the sole responsibility of the Sellers and
CRNY, subject to and consistent with all rules, regulations and
policies of the FCC. On and after the Closing Date, the Sellers
shall not directly or indirectly, control, supervise, direct or
attempt to control, supervise or direct the operations of the
Stations or WJDM.
10.6. SHARING INFORMATION. Each party hereto shall as promptly as
possible, and in any event within two (2) business days, inform the
other of any material communications between such party and the FCC
or any other Governmental Authority regarding this Agreement or the
transactions contemplated hereby. If any party receives a request
for additional information or documentary material from any such
Governmental Authority, then such party shall endeavor in good
faith to make, or cause to be made, as promptly as practicable and
after consultation with the other party, an appropriate response to
such request
ARTICLE 11
CLOSING
Subject to the terms and conditions herein stated, the parties
agree as follows:
11.1. CLOSING DATE. The Closings of the transactions contemplated under
this Agreement shall be held at such time and date or dates as
shall be mutually agreed by the Sellers and Buyer; provided,
however, that absent such agreement, the Closing shall occur no
later than ten (10) calendar days after final Commission approvals
of the assignments and transfer of control of all of the Stations'
and WJDM's Licenses have become final with any conditions with
respect to renewal imposed by such approval having been satisfied,
the finality subject to waiver by Buyer ("Final Approval") and all
other conditions to Closing shall have been satisfied on or before
the Closing Date. (The date scheduled, or required to be
scheduled for Closing hereunder is referred to herein as the
"Closing Date.") Final Approval shall be the approvals of the FCC
to the assignment or transfer of control of the Licenses which are
no longer subject to rehearing, reconsideration or review by the
Commission or to review by any court under the Communications Act
of 1934, as amended, and which actions are not reversed, stayed,
enjoined or set aside, and with respect to which no timely request
or petition for stay, reconsideration, review or rehearing or a
notice of appeal is pending and the time for such filing has
expired. Unless otherwise agreed by the parties in writing, the
Closing shall take place at the offices of Xxxx, Xxxx, Xxxx &
Freidenrich in San Diego, California.
11.2. THE SELLERS' OBLIGATIONS AT CLOSING. At Closing, the Sellers shall
deliver to Buyer the following:
(a) An Assignment of the Licenses described in Schedule A,
Warranty Deeds as to the Owned Real Property and an
Assignment and Xxxx of Sale, or similar instruments,
including third party consents to all "material"
Contracts requiring such consent for assignment,
transferring to Buyer all other Acquired Assets to be
transferred hereunder, free and clear of all liens,
encumbrances and restrictions of any kind whatsoever,
except for Permitted Encumbrances;
(b) An Assignment of the CRNY Stock together with the CRNY
Stock certificates and resignations of the officers
and directors of CRNY;
(c) The business records described in Section 1.7;
(d) An opinion of the Sellers' counsel, addressed to Buyer
in substantially the form attached hereto as Exhibit
E;
(e) Certificates of the CEO of each of Sellers and CRNY
verifying that the Sellers' and CRNY's
representations, warranties and covenants as provided
herein remain materially true and correct up to and
through the Closing Date;
(f) Certificates of Sellers' Secretary certifying as to
Sellers', CRNY's and WJDM Co.'s Articles of
Incorporation, By-Laws, and Board of Directors and
shareholder approvals (all of which shall be attached
thereto);
(g) The Non-Competition Agreement executed by the
President of CBC;
(h) The Indemnity Escrow Agreement;
(i) UCC reports dated not more than fifteen (15) days
prior to the Closing Date of the appropriate filing
officers in all jurisdictions in which Station Assets
are located evidencing no judgments, financing
statements, or liens are on file with respect to the
Acquired Assets and the CRNY Assets, or, if such
report evidences that judgments, financing statements,
or liens on file with respect to any Station
Assets, a termination statement or other appropriate
document signed by the secured party or lienholder
evidencing the release or termination of such
financing statement or such lien or a pay-off letter
from such secured party or lienholder indicating that
such party or lienholder will provide such release or
termination statement upon receipt of payment from the
proceeds of the sale contemplated herein, other than
Permitted Encumbrances;
(j) Good and valid ALTA title insurance commitments dated
as of the Closing Date insuring the Buyer's title as
fee owner in each parcel of Owned Real Property and
each such policy, as to the insurer, the insured, the
dollar limit and amount of coverage and the exceptions
and conditions thereof shall be, in all respects, in
form and substance reasonably satisfactory to the
Buyer;
(k) Internal Revenue Service Form 8594 completed by the
Sellers in connection with the acquisition of the
Acquired Assets by the Buyer; and
(j) Such other documents and instruments as might
reasonably be requested by Buyer to consummate the
transaction contemplated hereunder consistent with the
intent expressed herein.
11.3. BUYER'S OBLIGATIONS AT CLOSING. At Closing, Buyer shall deliver to
CBC the following:
(a) The Purchase Price in the manner set forth in Article
4;
(b) The Non-Competition Agreement and delivery of the
initial payment called for thereunder;
(c) The Note;
(d) The Security Agreement;
(e) Certified copies of resolutions of the members and
managers of Buyer authorizing the transaction
contemplated hereby;
(f) An Agreement to assume the obligations of Sellers
under the Contracts with respect to periods of time
from and after Closing;
(g) Internal Revenue Service Form 8594 completed by the
Buyer in connection with the acquisition of the
Acquired Assets from the Sellers; and
(h) Such other documents and instruments as might
reasonably be requested by Sellers to consummate the
transactions contemplated hereunder consistent with
the intent expressed herein.
11.4. CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to
consummate the transaction herein contemplated at Closing are
subject to and conditioned upon:
(a) The written consents of the Commission evidencing its
Final Approvals to the assignments and transfer of
control of the Licenses to Buyer with any condition
with respect to the grant of a pending renewal
application having been satisfied, provided that any
such approvals are without any condition that is
materially adverse to Buyer;
(b) The satisfaction at or before Closing of all
agreements, obligations, covenants and conditions of
the Sellers and CRNY hereunder required to be
performed or complied with by them on or before
Closing;
(c) The accuracy of the representations and warranties
made by the Sellers and CRNY;
(d) Written third party consents to all Contracts
identified as material on Schedule D where required by
the terms of the Contract or substitution by Sellers
of equivalent rights without materially adverse impact
upon Buyer's enjoyment of the Acquired Assets or the
CRNY Assets;
(e) No Seller, CRNY or Buyer shall be subject to any
judgment, order, injunction or decree of any court of
competent jurisdiction enjoining the consummation of
the transactions contemplated hereby;
(f) Delivery of the termination statements, pay-off
letters or other appropriate documentation called for
to be delivered by Buyer pursuant to Section 11.2(i)
so as to result in the release of all security
interests in the Station Assets and the CRNY Stock
other than Permitted Encumbrances;
(g) Sellers shall have executed and delivered the
Indemnity Escrow Agreement and funded the Indemnity
Escrow Account if required pursuant to the terms of
Section 4.2.4 hereof;
(h) Buyer shall have completed its environmental due
diligence in accordance with the provisions of Section
6.9, and any remediation required to be performed by
Sellers pursuant thereto shall have been completed to
Buyer's reasonable satisfaction;
(i) Buyer shall have received the title insurance
commitments required to be delivered by Sellers
pursuant to Section 11.2(j), and Buyer shall have
completed an inspection of the Real Estate and
determined to its reasonable satisfaction that the
utility services are adequate to the continued and
proper operation of the Stations and WJDM (except with
respect to the current tower site of KPLS which is
powered by generators) and that the buildings,
structures, improvements and
fixtures comprising the Real Property are in good and
technically sound operating condition in all material
respects, have no latent defects of material
significance and are reasonably suitable for the
purposes for which they are being used, provided,
however, that Buyer shall have provided Sellers with
notice of any claimed deficiency at least 30 days
prior to Closing so as to afford Sellers the
opportunity to cure such deficiency, or if such
deficiency is discovered by Buyer within thirty (30)
days of the Closing, Buyer shall promptly notify
Sellers thereof and Sellers shall have up to thirty
(30) days to cure such deficiency and Closing will be
postponed for such thirty (30) day cure period;
(j) Sellers shall have complied with each and every one of
its obligations set forth in Section 11.2;
(k) No material adverse change in the condition or status
of the Stations, WJDM, the Acquired Assets or the CRNY
Assets shall have occurred; and
(l) The transaction shall have been approved by CBC's
shareholders.
11.5. CONDITIONS TO OBLIGATIONS OF THE SELLERS. The obligations of the
Sellers and CRNY to consummate the transaction herein contemplated
at Closing are subject to and conditioned upon:
(a) The written consents of the Commission evidencing its
Final Approvals to the assignments and transfer of
control of the Licenses to Buyer with any condition
with respect to the grant of a pending renewal
application having been satisfied, provided that any
such approval is without any conditions that are
materially adverse to the Sellers;
(b) The satisfaction at or before Closing in all respects
of all agreements, obligations and conditions of Buyer
hereunder required to be performed or complied with by
it at or before the Closing;
(c) The accuracy of the representations and warranties
made by Buyer;
(d) No Seller, CRNY or Buyer shall be subject to any
judgment, order, injunction or decree of any court of
competent jurisdiction enjoining the consummation of
the transactions contemplated hereby;
(e) Buyer shall have complied with each and every one of
its obligations under Section 11.3; and
(f) The transaction contemplated hereby shall have been
approved by CBC's shareholders.
ARTICLE 12
MISCELLANEOUS PROVISIONS
12.1. SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES. All
representations, warranties and covenants of Sellers and CRNY
contained in this Agreement shall survive for a period of
twenty-four (24) months after the Closing Date, except that all
representations, warranties and covenants of Sellers and CRNY
contained herein with respect to title to the Station Assets and
the CRNY Stock contained in Sections 6.5, 6.6.3, 6.12(c) and 6.19.1
and with respect to payment of taxes contained in Sections 6.8,
6.12(e) and 6.19.3 shall survive indefinitely, and, with respect to
representations, warranties and covenants subject to Claims for
indemnification under Article 8 hereof, provided that notice of
such Claim is properly made within twenty-four (24) months of the
Closing, such representations, warranties and covenants shall
survive until final settlement or adjudication of such Claim.
12.2. EXECUTION OF DOCUMENTS. The parties agree to execute all
applications, documents and instruments which may be reasonably
necessary for the consummation of the transactions contemplated
hereunder, or which might be from time to time reasonably requested
by any party hereto in connection therewith, whether before or
after the date of Closing.
12.3. NOTICES. All notices, requests, elections, demands and other
communications given pursuant to this Agreement shall be in writing
and shall be duly given when delivered personally or by facsimile
transmission (upon receipt of confirmation) or when deposited in
the mail, certified or registered mail, postage prepaid, return
receipt requested, and shall be addressed as follows:
If to the Sellers, CRNY
or WJDM Co. (or any
of them): Children's Broadcasting Corporation
000 Xxxxx Xxxxxx Xxxxx, Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xx. Xxxxxxxxxxx X. Xxxx, President
Facsimile Number: (000) 000-0000
with copy to: Children's Broadcasting Corporation
000 Xxxxx Xxxxxx Xxxxx, Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq., General Counsel
Facsimile Number: (000) 000-0000
If to Buyer: Catholic Radio Network, LLC
0000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxx, President
Facsimile Number: (000) 000-0000
with copies to: Xxxx, Xxxx, Xxxx & Freidenrich
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile Number: (000) 000-0000
and
Haley, Bader & Xxxxx, P.L.C.
0000 Xxxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Facsimile Number: (000) 000-0000
12.4. EXHIBITS AND SCHEDULES. All Exhibits and Schedules referred to
herein are incorporated into this Agreement by reference for all
purposes and shall be deemed part of this Agreement.
12.5. ENTIRE AGREEMENT. This Agreement together with all Exhibits and
Schedules referred to herein and all other documents executed and
delivered by Sellers and Buyer on the date hereof contain all of
the terms and conditions agreed upon by the parties hereto with
respect to the transactions contemplated hereunder.
12.6. ASSIGNABILITY. None of the parties may assign their rights or
obligations under this Agreement without the prior written consent
of the other parties, except that the Buyer may make an assignment
to an entity under essentially common control as the assigning
entity, and Sellers and/or CRNY may make assignments as
contemplated under Section 12.10 hereof.
12.7. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the xxxxxxxxxxxxxxx, xxxxx, xxxxxxx, successors, and
assigns of the parties hereto.
12.8. HEADING. The headings contained in this Agreement are for reference
only and shall not effect in any way the meaning or interpretation
of this Agreement.
12.9. MODIFICATION. No modification of any provision of this Agreement
shall be effective unless made in writing and signed by the parties
hereto.
12.10 REORGANIZATION OF SUBSIDIARIES. Notwithstanding any covenant or
other provision of this Agreement to the contrary, Buyer
acknowledges that Sellers may be desirous of merging the License
Subsidiaries into the Asset Subsidiaries or similarly reorganizing
said entities prior to Closing for tax purposes, and agrees to
reasonably cooperate with Sellers if necessary to accomplish such
reorganization to the extent that such cooperation is necessary in
the execution and delivery of appropriate amendments hereto,
consents or applications to the FCC, provided, however, that
nothing in this Section 12.10 shall require Buyer to take any
action or amend this Agreement in any way if such action or
amendment is reasonably likely to delay the Closing, cause any
diminution of Buyer's enjoyment of its rights hereunder or cause
any economic loss to Buyer as a result. Sellers agree to reimburse
Buyer for any legal fees reasonably incurred by Buyer in connection
with the fulfillment of its obligations under this Section.
12.11. COUNTERPARTS. This Agreement and any other instrument to be signed
by the parties hereto may be executed by the parties, together or
separately, in two or more identical counterparts, each of which
shall be deemed an original, but all of which together shall
constitute but one and the same instrument.
12.12. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California. The parties
hereto hereby irrevocably and unconditionally consent to submit to
the exclusive jurisdiction of the courts of the State of California
and of the United States of America located in the Southern
District of California for any actions, suits or proceedings
arising out of or relating to this Agreement and the transactions
contemplated hereby (and they agree not to commence any action,
suit or proceeding relating thereto except in such courts) and
further agree that service of any process, summons, notice or
document by U.S. registered mail to the addresses set forth above
shall be effective service of process for any action, suit or
proceeding arising out of this Agreement, in the courts of the
State of California or the United States of America located in the
State of California, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such
court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
12.13. BROKER COMMISSION. The Sellers and Buyer each represent to the
other that they have not engaged a broker in connection with the
contemplated transaction, except that CBC has engaged Star Media
Group, Inc., and each party agrees to indemnify and hold the other
party or parties harmless against any claims made by a broker
through it or them in connection with the transactions contemplated
hereunder.
12.14. SALES TAX AND EXPENSES. Any sales tax, including bulk sales taxes
(if applicable), due upon consummation of this transaction will be
computed at Closing and paid by the Sellers and any claims or
proceedings arising therefrom shall be the sole responsibility of
Sellers. Sellers shall bear all costs, including all policy
premiums and surveys associated with obtaining the title insurance
commitments and policies required to be delivered pursuant to
Section 11.2(j) and all real estate transfer taxes. Sellers agree
to indemnify and hold Buyer harmless against any such claims in
connection with the transactions contemplated hereunder. Each party
shall bear its own legal and accounting fees incurred in connection
herewith, except as otherwise expressly provided hereunder.
12.15. PUBLIC ANNOUNCEMENTS. Sellers and Buyer shall consult with each
other before making any public statements with respect to this
Agreement or the transactions contemplated herein and shall not
issue any such press release or make any such public statement
without the prior written consent of the other party, which shall
not be unreasonably
withheld, conditioned or delayed; provided, however, that a party
may, without the prior consultation with or written consent of the
other party, issue such press release or make such public statement
as may be required by applicable law if it has used all reasonable
efforts to consult with the other party and to obtain such party's
consent but has been unable to do so in a timely manner.
12.16. MAIL. Sellers hereby authorize and empower Buyer from and after the
Closing Date (a) to receive and open mail addressed to the Stations
and (b) to deal with the contents thereof in any manner Buyer sees
fit, provided such mail and the contents thereof relate to the
Stations and WJDM or the Acquired Assets and the CRNY Assets.
Sellers agree to deliver to Buyer any mail, checks or other
documents received by them pertaining to the Stations, WJDM, the
Acquired Assets or the CRNY Assets. Buyer agrees to deliver to
Sellers any mail which it receives to which it is not entitled by
reason of this Agreement or otherwise and/or to which Sellers are
entitled to receive.
12.17. CLAUSES SEVERABLE. The provisions of this Agreement are severable.
If any provision of this Agreement or the application thereof to
any person or circumstance is held invalid, the provision or its
application shall be modified to the extent possible to reflect the
expressed intent of the parties but in any event, invalidity shall
not affect other provisions or applications of this Agreement which
can be given effect without the invalid provision or application.
IN WITNESS WHEREOF, the parties hereto, by their properly
authorized representatives, have caused this Agreement to be executed as of the
day and date first above written.
CHILDREN'S BROADCASTING CORPORATION CATHOLIC RADIO NETWORK, LLC
BY: /s/ XXXXXXXXXXX X. XXXX BY: /s/ XXXX X. XXXXX
---------------------------------- ----------------------------------
ITS: President & CEO ITS: President & CEO
--------------------------------- ---------------------------------
CHILDREN'S RADIO OF CHICAGO, INC. WAUR-AM, INC.
BY: /s/ XXXXXXXXXXX X. XXXX BY: /s/ XXXXXXXXXXX X. XXXX
---------------------------------- ----------------------------------
ITS: President & CEO ITS: President & CEO
--------------------------------- ---------------------------------
CHILDREN'S RADIO OF DALLAS, INC. KAHZ-AM, INC.
BY: /s/ XXXXXXXXXXX X. XXXX BY: /s/ XXXXXXXXXXX X. XXXX
---------------------------------- ----------------------------------
ITS: President & CEO ITS: President & CEO
--------------------------------- ---------------------------------
CHILDREN'S RADIO OF DENVER, INC. KKYD-AM, INC.
BY: /s/ XXXXXXXXXXX X. XXXX BY: /s/ XXXXXXXXXXX X. XXXX
---------------------------------- ----------------------------------
ITS: President & CEO ITS: President & CEO
--------------------------------- ---------------------------------
CHILDREN'S RADIO OF KANSAS CITY, INC. KCNW-AM, INC.
BY: /s/ XXXXXXXXXXX X. XXXX BY: /s/ XXXXXXXXXXX X. XXXX
---------------------------------- ----------------------------------
ITS: President & CEO ITS: President & CEO
--------------------------------- ---------------------------------
CHILDREN'S RADIO OF LOS ANGELES, INC. KPLS-AM, INC.
BY: /s/ XXXXXXXXXXX X. XXXX BY: /s/ XXXXXXXXXXX X. XXXX
---------------------------------- ----------------------------------
ITS: President & CEO ITS: President & CEO
--------------------------------- ---------------------------------
CHILDREN'S RADIO OF MILWAUKEE, INC. WZER-AM, INC.
BY: /s/ XXXXXXXXXXX X. XXXX BY: /s/ XXXXXXXXXXX X. XXXX
---------------------------------- ----------------------------------
ITS: President & CEO ITS: President & CEO
--------------------------------- ---------------------------------
CHILDREN'S RADIO OF MINNEAPOLIS, INC. WWTC-AM, INC.
BY: /s/ XXXXXXXXXXX X. XXXX BY: /s/ XXXXXXXXXXX X. XXXX
---------------------------------- ----------------------------------
ITS: President & CEO ITS: President & CEO
--------------------------------- ---------------------------------
CHILDREN'S RADIO OF NEW YORK, INC. WJDM-AM, INC.
BY: /s/ XXXXXXXXXXX X. XXXX BY: /s/ XXXXXXXXXXX X. XXXX
---------------------------------- ----------------------------------
ITS: President & CEO ITS: President & CEO
--------------------------------- ---------------------------------
CHILDREN'S RADIO OF PHILADELPHIA, INC. WPWA-AM, INC.
BY: /s/ XXXXXXXXXXX X. XXXX BY: /s/ XXXXXXXXXXX X. XXXX
---------------------------------- ----------------------------------
ITS: President & CEO ITS: President & CEO
--------------------------------- ---------------------------------
CHILDREN'S RADIO OF PHOENIX, INC. KIDR-AM, INC.
BY: /s/ XXXXXXXXXXX X. XXXX BY: /s/ XXXXXXXXXXX X. XXXX
---------------------------------- ----------------------------------
ITS: President & CEO ITS: President & CEO
--------------------------------- ---------------------------------
EXHIBIT A
DEPOSIT ESCROW AGREEMENT
SEE SECTION 4.2.1
EXHIBIT B
PROMISSORY NOTE
SEE SECTION 4.2.3
EXHIBIT C
INDEMNITY ESCROW AGREEMENT
SEE SECTION 4.2.4
EXHIBIT D
NON-COMPETITION AGREEMENT
SEE SECTION 5
EXHIBIT E
OPINION OF SELLERS' AND CRNY'S COUNSEL
SEE SECTION 11.2
SCHEDULE A
LICENSES, PERMITS AND AUTHORIZATIONS
SEE SECTION 1.1
SCHEDULE B
REAL PROPERTY
SEE SECTION 1.2
SCHEDULE C
PERSONAL PROPERTY
SEE SECTION 1.3
SCHEDULE D
CONTRACTS
SEE SECTION 1.4
SCHEDULE E
GENERAL INTANGIBLES
SEE SECTION 1.6
SCHEDULE F
ALLOCATION OF PURCHASE PRICE
SEE SECTION 4.7
SCHEDULE G
LITIGATION AND TAXES
SEE SECTION 6.8
SCHEDULE H
INSURANCE
SEE SECTION 6.10
SCHEDULE I
LABOR RELATIONS
SEE SECTION 6.15
SCHEDULE J
CRNY DISCLOSURES
SEE SECTION 6.19
SCHEDULE K
MATERIAL ADVERSE CHANGE
SEE SECTION 6.21
